M2 money stock contractions have led to recessions 4 times since 1913, with the current contraction implying a potential recession within a 12-25 month lag.
Nominal GDP, composed of real GDP growth and inflation rate, is crucial for understanding economic trends, yet central bankers often focus on short-term data.
Changes in money supply drive nominal GDP and inflation according to the quantity theory of money, with current contraction since July 2022 raising concerns.
In 1997 Bulgaria, a currency board system backed by 100% reserves and fixed to the German mark ended hyperinflation of 242% per month.
Steve Hanke accurately predicted OPEC’s collapse and oil falling below $10/barrel in 1985-86, successfully shorting oil futures and currencies.
Inflation rate peaked at 9.1% in the US and is expected to decline to 2% or below in 2023, based on quantity theory of money predictions.
The money supply is growing at 3.4% year-over-year, nearly 50% below the 6% rate needed to hit the Fed’s 2% inflation target.
The 2020 pandemic’s increase in money supply led to surges in inflation and asset prices, benefiting asset owners while decreasing real income for the middle class.
A flat 15% income tax is considered the most neutral fiscal policy option, while a tariff-based revenue system would be insufficient and potentially disastrous.
High tariffs could slow the real rate of economic growth from 2.2% to 2.1% over the long term, significantly impacting the economy over 10-20 years.
The headline CPI of 4.8% annualized is 2 percentage points above 12-month prior and 2.8 points above Fed’s 2% target, indicating persistent inflation concerns.
Retail sales increased 4.1% in the same month as inflation, suggesting spending kept pace with rising costs but same amount of goods purchased at higher prices.
The Michigan sentiment survey shows the fewest people since the Great Financial Crisis expecting their income to outpace inflation, signaling pessimism about real income gains.
Credit card borrowing collapsed with 23% interest rates, indicating people are struggling under existing debt rather than borrowing more by choice.
Oil prices at $80 per barrel and rising, despite forecasts of lower prices, are a key driver of inflation with energy costs making up 50% or more of many product costs.
The massive bond yield rally and equity price rise following the CPI number are likely to reverse as higher energy prices feed into gasoline prices and inflation numbers.
Shelter, at 40% of CPI, is one of the most lagging inputs, potentially keeping inflation stubborn even if it doesn’t rise much higher.
The prospect of interest rates higher for longer is the single biggest risk to markets that people aren’t focused on, as inflation remains significantly above the Fed’s target.
In junior mining, only 10-15% of companies generate significant positive utility, while 70-80% are essentially worthless, requiring investors to skillfully separate the wheat from the chaff in Vancouver’s market of narrative salespeople.
Gold has increased by 8.3% compounded annually over the last 25 years and is expected to perform well as concerns over the purchasing power of fiat-denominated savings grow.
The US government’s off-balance-sheet liabilities have a net present value exceeding $100 trillion, significantly higher than the $36 trillion on-balance-sheet debt, likely leading to inflation to reduce the dollar’s purchasing power.
With $141 trillion in aggregate net worth of American taxpayers and $136 trillion in government debt, the $5 trillion surplus is rendered irrelevant by the $2.5 trillion annual increase in the deficit.
Gold is underowned with a 0.5% market share of US savings and investments, compared to a 2% historical mean, suggesting potential for quadrupled prices if demand reverts to the mean.
40% of global exploration finance occurs in Canada, with 20% in Vancouver and Toronto, providing unparalleled access to companies responsible for this significant dollar volume.
95% of mining companies fail, with the industry losing $2 billion annually, emphasizing the importance of due diligence in identifying the successful 5%.
Investment maturation varies from 9 months for exploration to 5 years for commodity-related themes, with smaller market caps decreasing the probability of success.
Cut through the clutter and mainstream media noise. Get free, concise dispatches on vital news, videos and opinions. Delivered to Your email inbox daily. You’ll never miss a critical story, guaranteed.