Weekly Market Update by Retirement Lifestyle Advocates

Gold Reaches All-Time High

         The yellow metal continues to perform well.  As I have often stated here, I think that there is still more upside for gold and even more upside for silver, given the current level of the gold-to-silver ratio in light of historical averages.

         Gold typically performs well in times of economic turmoil, especially when inflation is running hot as it is presently.

         Gold prices now exceed $2,800 per ounce.

Recession Imminent?

         Jim Rickards, past guest on RLA Radio, published a piece last week in which he outlined three recession risks that lie ahead. 

         Rickards stated that despite new policies that will likely be economically sound in the longer term, these short-term risks will be difficult to overcome.  (Source:  https://dailyreckoning.com/rickards-a-u-s-recession-is-coming/)

         Rickards had this to say about the newly installed Trump Administration’s policies:

The new Trump administration is off to a fast start. All of the key nominations for the Trump cabinet and White House staff have been made, the Senate confirmation hearings (where needed) have mostly been held, and some of the key positions have already been filled. Trump signed a large pile of Day One executive orders over the course of January 20 and 21, immediately after the inauguration. More executive orders are in the pipeline.

This all stands in sharp contrast to Trump’s 2016 transition process where the nominees were not well chosen, confirmation went slowly, and the deep state holdovers from the Obama administration were still in place. What a difference four years makes.

We are extremely optimistic about Trump’s economic plans. Whether by executive order, regulatory processes, or legislation, Trump will be pursuing lower taxes, less regulation, and higher tariffs on foreign trading partners in order to promote high-paying jobs in the U.S.

         That said, Rickards noted that it will take some time for the positive effects of these new policies to be felt economically and in the financial markets.  In the near term, Rickards identified these three risks:

         One, stocks are extremely overvalued and will likely have to move lower.

         Two, economic contraction is coming (maybe here already, in my view).  Inflation has persisted, energy prices are high by historical standards, unemployment is rising, manufacturing is contracting, and hiring is frozen.

         Three, currency wars are back, and trade wars are coming.  Rickards notes that this will accelerate economic contraction.

Global Debt Reaches 323% of GDP

         Global debt has now reached an all-time high level, according to analyst Martin Armstrong.  (Source:  https://www.armstrongeconomics.com/armstrongeconomics101/economics/global-debt-reaches-326-of-gdp/)

         Mr. Armstrong notes that global debt increased by $12 trillion in the last three quarters of calendar year 2024.  Armstrong was quoting data from the Institute of International Finance.  This level of debt accumulation worldwide was higher than what was seen at the time of the COVID pandemic.

         Total global government debt is now $98,000,000,000,000 ($98 trillion) and is forecast to reach $130 trillion by 2028.  Mr. Armstrong suggested that his computer models are predicting that it’s at that time the world will feel the aftershocks of a global recession.

What a Terrible Investment

         Looking below the surface at the recent fourth quarter reported GDP numbers one finds some very troubling data.

         First, the GDP numbers.  According to the Bureau of Economic Analysis, the gross domestic product of the United States grew at a 2.3% rate.  That’s slightly lower than the consensus estimate of 2.6% and down from the 3.1% growth pace reported in the third quarter.

         In terms of dollars, the US economy grew by $130.6 billion.

         So the next logical question is: what funded this growth?

         You don’t have to look too far to find the answer.  It was funded by debt.  During the fourth quarter of the year, the US Government ran a deficit of about $711 billion.

         US Government spending is a component of the Gross Domestic Product.  I’ve made this point here previously, but it’s worth making again: if the US Government was not engaging in deficit spending, the recession would already be here.

         The ugly reality of the numbers is this:

         The US Government is spending more than $5 in deficit spending to get $1 worth of growth.

         Obviously, this can’t continue.

Another Reason to Own Silver?

         If you’re at all familiar with technical analysis, you may be familiar with a chart pattern known as a “cup and handle pattern.”  It is a fairly reliable pattern that forecasts a bull market when it appears.

         Check out this 55-year cup and handle pattern that is forming in the silver market.

         Got silver?

         This week’s RLA radio program features an interview that I did with Mr. Michael Pento, Host of the Mid-week Reality Check podcast. 

         The interview is posted and available for listening by clicking on the "Podcast" tab at the top of this page.

"No amount of evidence will ever persuade an idiot.”

                                                      -Mark Twain