Sponsored Content - Last year, everyone was looking for a return to normalcy. Unfortunately, as Mick Jagger and the Rolling Stones remind us…“You can’t always get what you want, says Rich Checkan, president & COO, Asset Strategies International.
So, despite on-again and off-again mask mandates, re-openings, and new and varied shutdowns, vaccination and booster shots, waning and surging infection levels, and variants such as Delta and Omicron, 2021 was anything but normal. 2021 was certainly not a year where we got what we wanted.
But good news…
Since I am writing this, and you are reading this, we made it to 2022 and a new shot at normalcy. Let’s see if we can make this one work.
But first, let’s look at the numbers for 2021, our predictions from a year ago, and some new predictions for 2022…
We Didn’t Get What We Wanted
…or what we predicted.
This time last year, I thought the forecast was one of the easiest to call in my quarter century at ASI. I truly believed it was a veritable no-brainer.
Last January, I expected…
- The US dollar to continue to show weakness
- Gold and silver prices to continue higher
- Silver to outpace gold to the upside again
- Wild mood swings in Bitcoin prices
I got the first three wrong and the last one right.
I’m not sure if I underestimated greed or ignorance last year, but the Federal Reserve somehow successfully convinced investors on the Titanic to rearrange the deck chairs and not to pay any attention to that big iceberg dead ahead.
I saw the movie. I don’t think that works out in the end.
The government shut everything down. That led to lower inventories and supply-chain disruptions. The government created trillions of dollars out of thin air and rushed it into the hands of businesses and consumers. The government forgave mortgage and rent payments as they increased unemployment benefits…making it more attractive for many to stay home and collect government checks than to go to work.
In short, the government—not Covid—was responsible for cutting productivity, cutting supplies of goods and services, and astronomically increasing the money supply.
Therefore, the government is directly responsible for the rapid rise of inflation we saw last year.
Either people were ignorant of the government’s role in all of this, or they didn’t care because they were chasing returns in equities markets. Honestly, I’m not sure if it is the former, the latter, or a little of both.
In the end, with inflation looming large, with interest rates yielding negative real returns, and with a money supply that suggests every dollar in your wallet will lose value faster than the Titanic took on water…gold and silver were largely ignored in 2021—precisely when people should have been buying them with both hands.
Will That Change In 2022?
It very well should for all the reasons I just stated. In fact, calling for a rise in gold and silver this year should be a bigger no-brainer than it appeared to be last year.
But not so fast…ignorance, greed, or both are still very much with us as we start 2022.
In fact, Federal Reserve Chairman Jerome Powell would have us believe they are on top of inflation and ready to put it back in the box by cutting asset purchases to zero by March and by raising interest rates up to four times this year.
Wow! Impressive! That will certainly stop inflation dead in its tracks!
We are expected to believe the Federal Reserve has inflation under control when it has been saying all year it was temporary and transient and wouldn’t amount to much. That is, until they started saying they were fooled by the strength of the inflationary pressure, and they believed it would last well into this year.
The Federal Reserve remains painted into a corner on interest rates. Sizeable increases in interest rates will make the servicing of the gargantuan debt impossible. Let’s face it. At nearly $30 trillion in debt, every quarter-point increase in interest rates adds $75 billion of debt servicing. At that pace, those quarter-point increases add up quickly!
Small increases in interest rates are largely symbolic and psychological. In practicality, raising interest rates four times by 25 basis points this year will have no real and meaningful impact whatsoever. And, although they will stop with the asset purchases in March, they will still be buying until then with no plan to sell…so no plan to reduce the government’s balance sheet.
As long as Chairman Powell continues to play the role of pied piper, leading investors to Wall Street, the luster of gold and silver will continue to be muted.
How Do You Keep What’s Yours in 2022?
Take advantage of the opportunity.
I do believe at some point this year investors will start to see the futility of the Federal Reserve’s position. When that happens, the Titanic’s deck chairs will be less important than that enormous iceberg—let’s call that inflation—the Titanic is about to hit.
When that realization occurs, you will wish you had already bought your alternatives to the US dollar…
- Rare Coins
- And yes…even some Bitcoin
Until then, you have a prolonged opportunity to buy two of the best-performing assets for the past 21 years very well. And buying well is one of the best ways we know to keep what’s yours!
Remember, gold and silver outperformed the DJIA, the S&P 500, and the high-flying Nasdaq even though that 21-year period included a 45% correction in the gold price from September 2011 to December 2015 and a 72% correction in the silver price from April 2011 to December 2015!
Over the past 21 years…
- DJIA is up 213%
- S&P 500 is up 220%
- Nasdaq is up 269%
- Silver is up 322%
- AND gold is up 525%
This is a great time to bank some profits in equities…where P/E ratios are at dizzying and unsustainable heights and preserve that purchasing power with the alternatives listed above.
This is a great time to make alternative investments in your Individual Retirement Accounts (IRAs).
This is a great time to cryogenically freeze your purchasing power before the US dollar’s fleeting strength flees your portfolio.
Ensure your retirement and non-retirement portfolios are protected against depreciating dollar.
Visit Asset Strategies International to learn more about investing in precious metals and other alternative asset classes.