BlackRock Sounds the Alarm: A Storm Brewing in the Economy
Last week, the Federal Reserve decided to raise interest rates by 0.25 percentage points, bringing the range to 5.25% to 5.5%. This move was made to combat the ongoing inflation surge. However, the current rates are still quite a distance away from the desired 2% inflation target set by the Fed.
Let’s take a closer look at some key points:
💰 JPMorgan’s Gold Price Target
In the midst of these economic developments, the largest bank in the U.S., JPMorgan Chase & Co., has some predictions about gold prices. They expect gold to reach record highs in 2024. According to their analysis, the average price target for gold will be $2,175 per ounce in the last quarter of 2024. The bank attributes this projected rise in gold prices to an anticipated decline in interest rates.
🏦 The Fed Raises Rates
The Federal Reserve raised interest rates by .25% in their recent meeting. Despite this increase, inflation remains above the desired 2% target. Federal Reserve Chairman Powell acknowledges that there is still a long way to go in addressing inflation concerns, but the bank has not provided clear guidance on whether rates will be raised again in September.
🌍 Putin Wipes African Debt
Russian President Vladimir Putin has announced that Russia will provide free grain to six African countries. This comes just days after Russia halted an agreement that allowed Ukraine, a significant grain producer, to export its products across the Black Sea. Additionally, Russia has canceled over $20 billion in debts owed by African countries.
🤖 Americans Concerned About A.I.
A survey conducted by Ipsos reveals that 61% of Americans believe that the rapid advancement of Artificial Intelligence (AI) could pose a threat to humanity’s future. Only 22% disagreed with this notion, while 17% were unsure.
Buckle Up! BlackRock Predicts Turbulence in the Economy
Get ready for a wild economic ride, as BlackRock, the world’s largest asset manager with a whopping $9 trillion under its belt, has issued a warning about potential chaos in the U.S. economy. Brace yourself for rollercoaster inflation and an unusual “full employment recession.” Let’s break down what they found:
The U.S. economy has been sluggish despite tight labor markets and strong consumer spending over the last 18 months.
Consumer spending has shifted from goods to services, leading to goods deflation.
The tight labor market has resulted in wage inflation as workers demand higher pay.
The result of these factors? Brace yourself for a bumpy ride in the coming quarters, as inflation is likely to settle near 3%, well above the Fed’s 2% target. This spells bad news for stocks, as high inflation cuts into profits and puts a squeeze on corporate margins.
Even if inflation does settle at 3%, it’s still higher than the Fed’s desired target. While it’s an improvement from the 9% we saw in 2022, it means the purchasing power of the dollar will continue to decline. This is concerning, especially for those who have been fighting with the soaring cost of living in recent years.
On a brighter note, gold tends to maintain a more stable value compared to the unpredictable fluctuations of paper currency.
Number to Keep an Eye On: $253,686*
This eye-popping amount is what you get when you divide the U.S. National Debt by the number of U.S. taxpayers. In simple terms, each taxpayer would need to come up with almost a staggering $254k to settle our national debts.
So, what exactly is the U.S. National Debt? It’s the total amount of money that the United States government owes. Imagine it as an enormous credit card bill, but on a national level, and yes, it keeps piling up with interest.
As the U.S. National Debt reaches a jaw-dropping $32.6 trillion, these mind-boggling numbers can feel overwhelming and almost surreal. But looking at the figures from another angle — $254,000 per taxpayer and about $97,000 per citizen — makes it more relatable. With that amount, you could get yourself a beginner home in some places or a fully-loaded dream car.
On the flip side, the revenue per citizen is around a mere $14,000 and the average family’s savings amount to only about $13,000. It’s clear that the gap between our debt and revenue is not just alarming; it’s nearly impossible to bridge.
How are we supposed to pay this off? 🤔
The harsh reality is that we can’t. We’ve gone beyond the point of no return when it comes to our debt.
The real question is not if the debt will affect us, but rather when and how severely.
The U.S. National Debt is a problem that we can no longer afford to brush aside. It’s time to confront the numbers, understand the consequences, and engage in serious discussions about our financial future.
*Note: The numbers are in constant flux, and you can track them live at usdebtclock.org.
The Gold Rush: Then and Now
Let’s get into the numbers and try to estimate the immense amount of currency that could flock to gold and silver during this next big gold and silver rush, comparing it to the situation in 1980.
With esteemed banks like JP Morgan predicting a potential record-breaking surge in gold prices by 2024, it’s crucial to examine how a genuine bull run on gold might unfold in today’s market.
In the present day, we have several significant factors that set the stage for a remarkable scenario:
- Almost 20 times more people worldwide who can invest in precious metals.
- A staggering 55 times increase in global currency.
- An astonishing 56 times more millionaires.
- A whopping 200 times more billionaires.
- An eye-popping 220 times more available consumer credit.
- A significant 31 times more assets under management.
- A remarkable 49 times greater global stock market cap.
It’s truly mind-boggling to calculate the exact impact of all these factors combined. What truly matters is not just the increased number of potential buyers but how many of them will indeed opt for gold and silver.
Similarly, the sheer increase in global currency doesn’t guarantee a proportional increase in gold demand, as much of it might be concentrated among those already well-off, who view precious metals as a way to safeguard their substantial assets during times of crisis.
To simplify matters, let’s group together currency, credit, assets under management, millionaires, billionaires, investors, and those with substantial assets to protect. Based on this, we could estimate that there’s likely around 50 times more currency available today for gold investment compared to 1980. However, the amount of available gold in the world has only doubled in that time, meaning there’s now around 25 times more currency per ounce of gold.
But wait, there’s more! 🤪
We can’t overlook the speed of information and market dynamics, the unique demand-boosting nature of gold and silver (Giffen Goods), and their positive response to global crises, geopolitical tensions, and economic uncertainties, all of which further amplify their appeal. Even with all these considerations, it’s still hard to fully grasp the magnitude of what’s to come.
During the bull market of the ’70s, gold surged by about 23 times and silver by around 40 times, with only a fraction of the current currency per ounce driving the demand. Now, if we add fear into the equation, the picture becomes even more compelling.
Although I empathize with the average worker, citizen, and investor who may face challenges during the impending crisis, I must admit the potential for precious metals investors is simply extraordinary. I’ve analyzed this scenario multiple times, and I keep reaching the same conclusion — this is not a dream; it’s an actuality, and it may even surpass our expectations.
Nonetheless, it’s vital to remember that price alone does not dictate value. The true worth of gold and silver lies in their intrinsic properties.
In my opinion, owning gold and silver today will eventually enable you to acquire numerous stocks, bonds, real estate, businesses, and so much more. Precious metals are poised to astonish everyone in the future.
So, bookmark this and revisit it when gold soars past $2,500… $6,000… $15,000 per ounce and continues to rise. The next great gold and silver rush is bound to leave you breathless.
