Hello and welcome to Gold and Silver Assets this is the horror show edition so I've put a rating here for this show so for those who aren't quite up to it skip straight to the market report now I'm not sure if you can hear any background noise but if you do it actually sounds like a chainsaw massacre there's nothing I can do about it other than perhaps joining anyway why have I called this the horror show edition well it's not just because it's Halloween, in fact Halloween came a little bit early for me over here I learned of something pretty horrific that made my blood chill and I wouldn't have believed it if I hadn't seen it with my own eyes and I can honestly say this is the most frightened I've ever been in my whole life and I'm actually extremely concerned not just my but not just for myself but for each and every one of you now unfortunately I'm not a liberty to discuss it further so instead we're going to look at some things that are believe it or not a lot less frightening
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See Full Video Transcript Below
Hello and welcome to Gold and Silver Assets this is the horror show edition so I've put a rating here for this show so for those who aren't quite up to it skip straight to the market report now I'm not sure if you can hear any background noise but if you do it actually sounds like a chainsaw massacre there's nothing I can do about it other than perhaps joining anyway why have I called this the horror show edition well it's not just because it's Halloween, in fact Halloween came a little bit early for me over here I learned of something pretty horrific that made my blood chill and I wouldn't have believed it if I hadn't seen it with my own eyes and I can honestly say this is the most frightened I've ever been in my whole life and I'm actually extremely concerned not just my but not just for myself but for each and every one of you now unfortunately I'm not a liberty to discuss it further so instead we're going to look at some things that are believe it or not a lot less frightening but nevertheless scary one of our viewers recently discussed with me his ideas about the role of a decrease in the workforce adding momentum to inflation now if you think about it inflation is basically more currency chasing fewer goods and services if there was no money printing at all but fewer goods and services then actually inflation would occur so that brings us to this chart which shows the number of people who have quit their job in the USA we can see that the blue line here shows the numbers that quit and that's basically gradually increased over the past decades over here you just saw this steady constant rise then we saw this massive drop in 2020 but from the looks of this it started very early in 2020 it looks like probably January 2020 but then two or three months later we saw this massive rebound back up here and actually it's hit record levels over four million so why is this happening one theory is that the most recent rise is because of stimulus checks which basically discourage people from working but I don't think that's the whole story and if you look at data from other countries that didn't have stimulus checks and you know in some countries they had what's called wage subsidies so you still had to be in work not quitting to get that in those countries they actually show the same chart the same trend now another factor that's becoming increasingly common is being pushed into quitting as a result of deteriorating conditions or even in some cases working conditions becoming dangerous and unmanageable but also being forced to comply with various regulations and look there are many examples of people like me who have had 25 years of training and experienced just flush down the toilet I actually really enjoy working but sadly it's just become impossible for me to do so my current profession but I don't think that's still the whole explanation so here on this chart what I've added is in red the total household assets now isn't it interesting how they seem to pretty much move in lockstep here to me this suggests that as asset prices rise more and more people feel more comfortable and able to quit jobs that they don't like now this of course can lead to a kind of vicious cycle so money printing of course is what has led to these increased asset prices and that allows more people to feel able or comfortable to quit their jobs because they think that they can rely on those rising asset prices to continue but then of course that leads to fewer goods and services which results in inflation which results in higher asset prices and I think it's only when that inflation actually hits the consumer that this will become a problem now there's also another problem with this which I'll get back to later in this segment of the show it's interesting because the Federal work reserve website actually separates out the figures for quits into different work sectors and I had a look through them and all of them showed pretty much the same rise in quits since 2020 except for this one yes fewer government employees are quitting in the past year I thought that was quite an interesting observation there here's another scary chart as well as asset prices going up household debt levels have also increased and the income to debt ratio is currently at record levels how on earth could things have got this far over here the household debt income ratio is about 165 right now well anyway how could things have got this far well that's quite an easy question to answer it's all because of low interest rates the lower the interest rate the greater the amount of debt that can be serviced so on this chart the green line shows the interest rate over here and in red shows the cost of servicing the debt as a percentage of disposable income the big question here is at what interest rate does the cost of servicing become unmanageable for households what is the tipping point going to be now it's not just interest rates that's going to be the factor here of course cost of living so if we get inflation for the consumer that becomes unmanageable that could tip this over the edge but also you know specific to properties there are things that are being done so for example in the UK they're adding onerous regulations like you have to have a house that's green compliant in order to be able to sell it basically because the mortgage lenders won't lend against a house that's that isn't compliant and of course in the UK I mean a lot of the houses are pretty old there so that's gonna cost an arm and a leg also the other trick that can be pulled is property taxes now I heard something and I'm not sure if it's true so if we've got anyone from greece that can confirm this or not but I heard a story how in Greece back in the GFC property taxes went up by seven times now I get the feeling property taxes are going to go up certainly here it's highly, highly, likely next year so I think there are multiple kind of factors that are going to affect the housing market now this is a chart of the overnight reverse repo and I've tried really, really, hard to understand the mechanism and implications of the overnight reverse repo and I still don't quite get it it's not an easy topic to to understand but overall my impression is that this is aimed at avoiding negative interest rates in the USA but the problem is I'm not sure what the repercussions of doing this are all I know is that this looks really abnormal and so I doubt the repercussions will be pretty that's why I think this is a scary chart steel is very important for industry and features in the book atlas shrugged so for the past decade as you can see here steel has been in a trading range trading sideways really between 400 and 900 but look at this amazing string of green candles at the end there and steel prices have more than tripled over the space of a year now I don't think that the knock-on effects of this have been felt yet I actually think there's going to be a lag before it hits us and that's the thing with these rises in all these commodities although you know people are noticing increased food prices I don't think we've actually seen the full force of the knock-on effect of what we're seeing on these charts I think that's to come and isn't this a whopper of a move the UK Natural Gas price went up 50 times in under 18 months wow so this is really scary because energy is the lifeblood of the economy and this has serious, serious, repercussions throughout the economy the scary stuff the black line on this chart represents the M2 money supply and as we all know it's been rising exponentially the red line shows something that's barely existed in the 60s and 70s and it started to rise in the 90s but really gathered pace in the 2000s and in the past 18 months it's gone pretty vertical the correlation coefficient at the bottom shows that this is perfectly correlated to money supply so what's the red line well I reckon it's the number of Karens in society now everyone's going to have a slightly different definition of what a Karen is so I'm just going to tell you what my definition is and that refers to someone who is entitled selfish self-serving and always takes every opportunity to complain about the most minor things they tend to be pushy and completely lacking in empathy they lack a sense of humor and are not only miserable people but they also try to inflict their misery on other people they come in all genders and races and I think they're the product of a fiat society I can't stand these fiasco bags I really can't what's the gray line well that represents the number of people in society who are able to think critically and think for themselves now this has got nothing to do with iq which I think is a complete con anyway and it certainly doesn't relate to the number of letters someone has after their name yet another con we seem to be living in a time where the majority of people have outsourced their thinking and that to me is very, very, scary all of these things seem to have led to what I believe is a mass psychotic event and I'm losing hope of a return to sanity I hope we do return to sanity soon please and finally we come to a chart that may seem quite basic at first but I think it has very deep meaning for many aspects of our lives this is the thanksgiving turkey problem or for the brits out there the Christmas turkey problem I learned of this from Nasim Talib's book Black Swan so this turkey was Fed very, very, nicely every day so you got a lovely turkey here it started off as a little tiny baby turkey here it Fed every day and it was just flourishing, enjoying life, enjoying its meals and as these days passed the stronger the turkey's belief that its best interests were being looked after so the turkey basically all this time believed that it would be Fed and looked after for the for its whole life forever of course just before thanksgiving something completely unexpected happened to the turkey and that incurred a revision of belief let's think back to that chart of job quits and asset prices so in Australasia property prices have been pretty much continually going up for 30 years and just like with turkey many believe that this will never change in fact many of those that quit might be relying on you know income from rental incomes or living off the equity from their houses and projecting those past returns forwards now my concern is that the rug gets pulled out from underneath us potentially in a very nasty way that could be devastating half the battle is just considering this as a serious possibility now I'm sure that this turkey never considered thanksgiving as a possibility this is why diversification is so important however profitable something might be being all in on one asset risks this turkey problem and I guess the same could be said about careers as well I have had some people comment that I'm too doom and gloom but look I prefer to call it balanced and realistic I think that being afraid is important because it shows an acknowledgement of risk in fact I think we're living in a very dangerous time right now and I think we're heading into something none of us have ever experienced before and it will incur a revision of belief I have reason to believe that not only should we be afraid but we should be very afraid and I'm not just talking about finance now more than ever it's crucial that you use common sense and think for yourself don't just go along with the crowd without thinking for yourself as we all know the crowd is always wrong when emotions are high I've come to realize that having a Plan B is not enough we need plans B, C, D, E and so on I don't believe we can accurately predict the future but what we can do is consider the possibilities and prepare accordingly next up the market update well not a lot's changed so not a lot to say this week so I'll make it short and sweet we'll start with gold priced in us dollars on the daily scale and yeah we got a little bit of a pull back as we talked about last week I think there's still a little bit more juice in there so a little bit more downside possibly to 1760 because we do have a little bit of support there basically we're just waiting we're still sideways and ideally we want to get to the 1840 level really above there before we can start getting excitement in any form so yeah we're just waiting for it to pick a direction but look like I said that this turn here has taken a long, long, time but to me it does look like a turn if you see here anyway I'm still bullish and I annoy some people when I say that but pay silver price in us dollars on the daily scale and again looking quite positive and we got that little pullback I think again a bit more downside there could even go as far as re-testing this channel again hard to say but yeah that is a possibility this bit here could act as a bit of support though and the 23 level has been reasonable over there as well so possibly something like this I'm thinking and then the GDX and so this is on the daily scale and we actually gapped down here so obviously the miners basically dropped a lot more than the metal itself and we were talking about this gap in last week's show I still think that's going to be filled or attempt to be filled so again a little bit more downside but the good news is we've got a lot more gaps above we've got one here big one there and another one over there so yeah just a little bit further to drop before I think if we do if we do something like this then we've got this inverse head and shoulders over here and that will give us a target of up into the high 30s basically 39 possibly even 40 and finally we've got the silver junior miners SILJ and a similar story you see so again we've got the gap over here so this has actually got a bit further to fall down here over here so yeah that's what I'm thinking and again we've got that kind of balance over here and this would kind of bring it to you know at least 50 percent of retracement of this rise here and so yeah potentially we could take off from that point anyway for those of you who missed last week last week I went through a lot more in terms of indicators and things like that nothing's really changed since last week not a huge amount so not much to say I'm afraid now I've noticed that quite a few YouTube creators have had their channels randomly deleted look I don't know if talking about gold is an offense yet it could be though anything's possible these days and so just in case I've also got my channel on odyssey and so the videos come up there exactly the same as they're over here now I mean I was actually at one point thinking of just going on to odyssey the problem there is that the commenting system doesn't seem great because I don't see a way of how I can reply to comments so you know I've had a couple of people write some nice comments there in the past but I've not been able to reply to them I don't know if they've set that up or am I missing something if anyone knows so anyway but that that is an option there so just in case all right then that's all for today see you next week bye
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