As I noted yesterday, the U.S. is turning into a banana republic.
By quick way of review, the hallmarks of banana republics/ 3rd world countries are:
- Rampant corruption/ abandonment of the rule of law for those who are politically connected.
- Manufactured economic data.
- Currency devaluation/ higher rates of inflation.
Today let’s focus on #3.
The talking heads in the media like to point to stock market gains as indicative of wealth in the U.S. The only problem with this is that the stock market is priced in U.S. dollars. And the U.S. dollar has lost a THIRD of its purchasing power since 2008.
This begs the question… just how much of the “wealth” generated by the stock market has come from currency devaluation?
The answer, unfortunately, is a LOT.
When priced in gold, the S&P 500 actually peaked back in late 2021/ early 2022 and has since declined to levels first traded in the mid-1990s. Put another way, when you price the stock market in gold, a currency that CANNOT be devalued, stocks haven’t generated any real wealth in ~30 years.
I wish that was the end of the bad news, but it’s not.
The ratio between the S&P 500 and gold has just taken out the bull market trendline that has supported EVERY MAJOR low since 2014. This is a MAJOR warning that the financial system is entering a new regime in which hard assets outperform stocks.
Put simply, if you’re allocating the bulk of your capital to stocks, you might want to rethink things. As I’ve already illustrated MOST of the stock market gains were the result of currency devaluation. And by the look of things, this trend is about to accelerate as gold outperforms the stock market.
On that note, our Special Investment Report titled Survive the Inflationary Storm details FIVE secret investments you can use to potentially make extraordinary gains as gold and precious metals plays erupt higher in the coming weeks. These are HIGH OCTANE positions that are already up 75%, 140%, 150%, 180%, 280% and an incredible 574% this year alone!
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Best Regards
Graham Summers
Chief Market Strategist
Phoenix Capital Research