Well, in this article, I’m going to present the case that the US economy is already a disaster – we just don’t know it yet (thanks largely, or at least in significant part, to the government’s practice of being woefully dishonest in its major economic data reports). And the best time to invest in gold and silver is before everybody knows - 

• That we’re in a recession
• That the government is bankrupt
• That the economy is in freefall

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“It’s a recession…just shoot me”      

The reason to buy gold and silver NOW is because you don’t know when the current bull market in precious metals is going to turn into a moonshot that carries gold and silver prices astronomically higher. And you don’t want to have the following scenario unfold in your life: It’s a Friday afternoon, the markets are about to close. It’s been a really strong week for gold and silver – let’s say gold is up to $3,200 an ounce and silver, trading at $45 an ounce, is looking like it’s finally going to take out that all-time high of $50 per ounce. You think that gold and silver are going to start making a really big move up in price. Therefore, you plan to do some big-time buying first thing Monday morning…but when Monday morning arrives, you look and – “Wait – can that be right? – Gold is trading at $7,500 and silver is at $160??”

Oops - you missed out. You missed the chance to easily make a fortune, with minimal risk.

Precious metals expert analyst Andy Schectman, the CEO of Miles Franklin Precious Metals Investments, is fond of saying that the rise in gold and silver prices will unfold “little by little by little…then all at once”.

All right, let’s take a look at some of the primary economic indicators – such as inflation, employment, and the debt trap that the US government is in. And let’s use some real numbers - not the phony official numbers - to get a reality check on what the state of the US economy really looks like.

How bad is it REALLY? I won’t be covering here all the red flags furiously being waved by the economy. Why not? – Because if I talked about all of them, I’d have to write a book, not just an article.

The Rate of Inflation is a Lot Higher Than 3%

We hardly even need to look at the federal government’s monthly lie – er, uh, I mean monthly report - on the rate of inflation. We can feel in our wallets and our bank accounts that inflation is bad. For many Americans, it’s so bad that it’s more than completely eating up their weekly paycheck. Every month, they’re having to resort to running up the balances on their outstanding credit card bills even higher, just to keep a roof over their heads and buy food. Every stop to fill up your car with gas is a painful experience – you don’t even want to look at that total showing on the gas pump – those dollars and cents numbers look like they’re rolling over at the speed of light.

But, gosh, things aren’t really that bad, are they? The government is reassuring me that things are fine, sternly telling me not to believe my lying eyes.

According to the latest Consumer Price Index (CPI) report – the number that the federal government uses as its primary tracker of the rate of inflation – annual inflation is only running somewhere around 3% to 4%. Yeah, that doesn’t sound too bad – only three or four dollars out of every $100 in your bank account is getting burnt up and thrown in the trash this year.

The problem is that the cumulative inflation over the past three to four years adds up to about 30%. So, now, it’s $30 out of every $100 that you thought you had that’s getting thrown in the fire and going up in smoke. To put it another way, in order for you to maintain (not to get any better – forget all about that foolish notion – just to maintain) the same standard of living that you had three or four years ago, to be -

• Living in the same kind of house or apartment
• Eating the same food
• Doing about the same amount of travel
• Taking the same kind of vacations
• Having the same cable or satellite TV package

…you’d need for your income to have increased by about 30% over what it was in 2020 or 2021. Oops, I forgot about this year’s apparent 3%-4% increase – so make that approximately 34%. Now, I don’t know about you guys, but I haven’t worked very many places where my salary went up by 30-35% or more in just three years. Tell you what – just for fun, why don’t you try going into work tomorrow and asking your boss, “Hey, can we just go ahead and agree that you’ll give me a 15% annual raise every year?” (If you have a pretty nice boss, then he probably won’t fire you for saying that – he’ll just laugh at that silly idea.)

And now for the bad news…

The truth is that the current annual inflation rate is closer to 10% - not just 3%. How did I come up with that number? I did it by just making a little visit to the “honesty-about-the-economy” website, ShadowStats.com. John Williams’ ShadowStats site is described as follows:

"John Williams’ Shadow Government Statistics" is an electronic newsletter service that exposes and analyzes flaws in current U.S. government economic data and reporting, as well as in certain private-sector numbers, and provides an assessment of underlying economic and financial conditions, net of financial-market and political hype.”

In other words, John exposes the ugly truth about the actual state of the US economy, by revealing some “alternate data”. And here’s a picture of ShadowStats’ alternate data on inflation:

The orange line on that chart reflects the US government’s official inflation statistics, as reflected by the CPI numbers, which are calculated monthly, quarterly, and annually. The blue line shows the real annual inflation rate, which, like I said, is closer to 10% than it is to just 3-4%.

Now, how did ShadowStats come up with that significantly higher inflation number? – Very simple, really. Rather than using the US Bureau of Labor’s (BLS) current calculation of the inflation rate, ShadowStats calculated the CPI using the same formula for the calculation that the Bureau of Labor was using back in 1990 (when inflation wasn’t nearly the huge problem that is now).

You see, the dirty little secret about the CPI report is that – precisely in order to fiddle the numbers to make things look better, i.e., to make the inflation rate look lower – the Bureau of Labor constantly changes the way that it calculates the Consumer Price Index. It includes the prices of some consumer goods or services that it wasn’t using before in the calculation; it discards some goods or services that it previously was using in the calculation; and it changes the weight that it assigns to the prices of various consumer goods and services that are included in the calculation.

So, you want to make the inflation rate look like it’s lower than it really is? – Well, just change the way you calculate the CPI numbers and – poof! – there you go, lower inflation. 😊

And from where I sit, looking at my own personal monthly expenses, an 8-10% annual inflation rate feels like a more accurate reflection of the current state of the economy than the government’s phony 3% number. After all, a 3% annual inflation rate wouldn’t hardly explain the fact that the average price of a gallon of milk has gone from $2.89 in 2018 to $4.09 in 2024.

And the National Employment Picture is a More Gloomy One than the Bureau of Labor Statistics Paints

Now let’s take a look at the employment (or unemployment) picture.

Hopefully, you haven’t already forgotten that the Bureau of Labor just recently fessed up to the fact that the monthly Non-Farm Payroll (NFP) reports for the past year overstated the number of jobs created by nearly a million jobs. And not only that, but it’s also true that the massive downward revisions of the jobs numbers are pretty much par for the course – something that typically occurs almost every year. It’s a very rare event that the jobs numbers get revised upward. No, the “corrections” are almost always downward, not upward, revisions.

You might want to sit down before looking at the following ShadowStats’ unemployment chart (again, the orange line is the official government number – the blue line is the ShadowStats calculation):

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Taking into account all the “long-term discouraged workers” (that’s, essentially, unemployed people who have pretty much given up on looking for work), who aren’t included in the Bureau of Labor’s unemployment report, we end up with a picture of unemployment at “Great Depression” levels – around 25% - rather than the government’s rather moderate estimate of just 4% unemployment.

More fun facts: Andy Schectman, my man for somewhat obscure and important economic facts, reports that approximately 1.3 million Americans lost their jobs last year. And the sad replacement for those 1.3 million lost full-time jobs was apparently about 600,000 part-time jobs…that were primarily filled by illegal immigrants! We’ve gone nearly a year and a half now with, every month, full-time jobs – the good-paying, with benefits, jobs – disappearing, and only being replaced by a lower number of less satisfactory part-time jobs.

Have you ever heard of the “Sahm rule”? – Don’t feel bad if you haven’t. That’s one of those rules that’s mostly only known to professional traders and market analysts. Anyway, the Sahm rule is named for economist, Claudia Sahm. Claudia is the founder of Sahm Consulting, as well as the Chief Economist for the investment firm, New Century Advisers. She also worked for the Brookings Institution, and for the Federal Reserve for over a decade earlier this century. So, what’s the Sahm rule? – It’s a recession indicator that’s based on unemployment figures. The rule is stated as follows: The economy is considered to be in a recession “…if the three-month average of the unemployment rate has risen by at least 0.5 percentage points above its lowest point in the previous 12 months.” The Sahm rule has signaled nine straight recessions in a row (going all the way back to 1970), and has been 100% accurate - no false positives.

Well, guess what? – The three-month average unemployment rate is up 0.53 percentage points from its 12-month low. The Sahm rule says that the lurking economic monster, Recession, has arrived, or is in the process of arriving. As I noted earlier in this article, things are bad – most people just aren’t yet aware of how bad they really are. However, as a client of True Gold Republic, you may be counted among the fortunate, knowledgeable few, as we try our best at TGR to keep you ahead of the curve on what’s really going on in both the US economy and the global economy.

The Debt Trap the US Government is In

Finally, let’s turn our attention to the sorry fiscal state that the US government currently finds itself in.

The national debt of the United States is now more than $35 trillion. Trillion! How is that ever going to be repaid? It’s not – there’s just no way – and that’s why we’re looking at “the Great Financial Reset”, whatever that turns out to be. And this doesn’t just apply to the US – the UK and the EU are in essentially the same quagmire, just a few trillion dollars less, but proportionately they’re in about the same boat as the US federal government.

WHAT IS THE NATIONAL DEBT TODAY?

$35,324,829,414,507

That's

$104,845

for every single person in America.

(Have you got your $104,845 to chip in? No checks, cash only…or an American Express card.)

But what many people overlook is the fact that there’s an even bigger financial problem for the US government than that $35 trillion debt, a debt that is now increasing by an additional $1 trillion about every 100 days. What’s the bigger elephant in the room? – Unfunded liabilities. “Unfunded liabilities” is a term that sounds a bit confusing to some people at first glance. Unfunded liabilities are financial obligations that the government has, obligations to pay out money in the future. The “unfunded” part refers to the fact that these are financial obligations that the government doesn’t have the money to pay.

The main unfunded liabilities for the US government are Social Security, Medicare, and Medicaid. The current estimate of the total in SS, Medicare, and Medicaid unfunded liabilities is approximately $73 trillion. That’s more than double the $35 trillion debt that we don’t have the money to repay. Put it all together and the US government is on the hook for well more than $100 trillion…$100 trillion in money that it doesn’t have. As incredible as this scenario may seem, it’s a fact, a cold, hard financial reality. The conversation goes like this:
“So, Uncle Sam, over a period of years here, you’re going to have to pay out approximately $73 trillion in Social Security, Medicare, and Medicaid benefits.”
“Right.”
“Okay, so, how much of that $73 trillion do you have?”
“Uh, well…none.”

Oh, and, by the way, the total federal income tax revenue that the US government receives each year is less than $5 trillion.

The US government is insolvent, it’s bankrupt. We just haven’t quite woken up to that fact yet. When we do, it’s likely to be an extremely rude awakening.

Gold is Waiting in the Wings

UK economist and precious metals market analyst, Alasdair Macleod, warns that if any other major nation – such as China or Russia – were to return to the gold standard, that would likely result in a sudden “the emperor has no clothes” moment of realization that would collapse the US dollar (and the other major fiat currencies, such as the British pound and the euro – as all of the major currencies are part of the fiat currency system that was created when Nixon abandoned the gold standard in 1971). Probably the only solution for the US and other nations then, in order to avoid total economic freefall, would be for all the major developed countries to join in a return to the gold standard.

And here’s where we might see the fulfillment of Schectman’s prediction of “little by little…then all at once”. Because the only way that the US could return to the gold standard would be by doing a massive revaluation of gold. It would have to re-value gold to a price that would make its gold reserves equal in value to the staggering M1 money supply of approximately $18-$20 trillion. Overnight, the per ounce price of gold would have to be revalued at an exponentially higher price.

There is precedent for such a revaluation. I’ve explained in other articles how President Franklin Roosevelt, in the early 1930s, after effectively confiscating all the privately held gold in the United States, at a price of $20 per ounce – then turned right around and declared the value of gold to be $35 an ounce. By doing so, he nearly doubled the total value of the US gold reserves virtually overnight, with just the stroke of a pen.

(Just imagine how some US private citizens who’d had a substantial amount of gold – and many did at that time, as gold and silver coins were, prior to the confiscation, still widely used as legal tender throughout the United States – felt when he made that move. “Hey, all that gold you had, that I forced you to give me and paid you $20 an ounce for, for a total of $100,000? – Yeah, well, now that it’s all my gold, it’s $35 an ounce, and worth a total of $175,000.”)

Central banks are both the largest and the most well-informed investors – and they have been buying gold steadily since 2010, and hand over fist for the past five years (well, China has been doing it since 1980). Are we to believe that they’re all just doing that on a whim? Or is it more reasonable to conclude that they foresee, and are planning for, a return to the gold standard? I’d also point out that this concentrated effort by the central banks to acquire substantial gold reserves has been accompanied by the Basel Committee on Banking Supervision (BCBS) declaring gold a Tier One reserve asset under the Basel III rules.

Macleod argues that the ultimate value destiny of all the fiat currencies is $0. Why? – Because zero is their actual intrinsic worth. Without the backing of gold, they’re all, dollars or euros or yen, just pieces of paper.

The Crash is Already Here – Conclusion

The good news is that if there does come a sudden wake up call, when there begins to be a fairly widespread consensus that, “Oh, the economy is shot to hell”, while some are predicting a possible stock market crash of 50%, the one asset class that is best poised to monumentally increase in value is precious metals – gold and silver (and, well, I guess, rhodium and platinum and palladium, too).

Some sort of a day of reckoning is inescapable. Inflation isn’t mild or moderate (and not “transitory” either) – it’s “runaway”. The price of everything – homes or rent, automobiles, food, gas, electricity, travel, insurance – is becoming increasingly out of reach for middle class Americans. (It’s already been out of reach for the poor for some time now.) The true employment (or rather, UN-employment) numbers are at, not just recession levels, but Great Depression levels.

Tens of millions of people are either totally out of work, or trying to scrape by on the meager income they can get from part-time jobs with no benefits. There’s also a civil war brewing as struggling citizens begin realizing that part of their job and income troubles stem from the fact that illegal immigrants have been snatching up the available jobs because they’re willing to work for lower wages.

And the national debt clock keeps ticking away like the biggest financial time bomb in history.

I am getting a kick out of how the major banks, the same banks that have looked down their noses at gold for decades, coldly dismissing it as an investment, have pretty much been forced to gradually inch up their future price projections for gold to higher and higher levels (and you can almost feel how much it pains them to do so). Their revised price projections are, so they say, based on significant political uncertainty in the US and continuing geopolitical market risks. After gold topped $2,500 an ounce, UBS came out and made the “bold” prediction that their expert analysts think that the price of gold could hit $2,700 an ounce by the middle of 2025. Hey, UBS, I’ve got a news flash for you: Gold could hit $2,700 an ounce by the middle of next week. Wake up and smell the coffee. 😊

• J.B. Maverick

P.S. Joke of the Day – I just wanted to share this pretty funny joke I heard with you.
A Jewish rabbi, a Hindu, and a politician, traveling on a long journey, ask a farmer if they can sleep at his place for the night. He tells them, okay, that he’s got a spare bedroom with two beds, but one of them will have to sleep out in the barn. The Hindu volunteers to sleep in the barn. But a few minutes later, there’s a knock at the bedroom door. The rabbi and the politician open the door to see the Hindu standing there. He explains, “There’s a cow in the barn. Cows are sacred to Hindus. I can’t sleep in the same place occupied by a sacred cow.” The rabbi says he’ll go sleep in the barn. But a few minutes later, there’s a knock at the door. The rabbi is back, saying, “There’s a pig in the barn. Pigs are unclean animals for Jews – I can’t sleep where there’s a pig.” So, the politician says he’ll sleep in the barn. A few minutes later, there’s a knock at the bedroom door. When the rabbi and the Hindu open the door, the cow and the pig are standing there… 😊

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Sources:

https://www.moneymetals.com/news/2024/09/20/gold-the-all-weather-investment-003480

https://www.usinflationcalculator.com/inflation/milk-prices-adjusted-for-inflation/

https://www.youtube.com/watch?v=kZkaBwCbsFw&t=582s

https://www.youtube.com/watch?v=rei-TJ15pq8

https://www.shadowstats.com/

https://en.wikipedia.org/wiki/Claudia_Sahm

https://sites.google.com/site/claudiasahm

https://www.reuters.com/markets/commodities/central-banks-bought-most-gold-since-1967-last-year-wgc-says-2023-01-31/

https://milesfranklin.com/

https://www.youtube.com/watch?v=G35n_umPimE

https://pinnacledigest.com/mining-stocks/central-bank-purchases-gold/

https://www.cato.org/blog/medicare-social-security-are-responsible-100-percent-us-unfunded-obligations

https://substack.com/home/post/p-149304364?source=queue

https://www.kitco.com/news/article/2024-09-23/gold-price-could-hit-2700-mid-2025-silver-will-outperform-gold-ubs

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