Up... Up... And Away!

Nickel goes bananas, gold clocks records and Ze Russians keep coming...

(Source: Getty Images)

Joel Bowman, reckoning today from Buenos Aires, Argentina...

“If not now for gold,” remarked a mate this week, “then... never.”

Sure enough, the Midas Metal crested all-time highs in Euros, Swiss Francs and Japanese Yen on Tuesday, coming within a few bucks of its greenback record, that intraday high of $2,074/oz set back in August of 2020.

An ounce of Keynes’s “barbarous relic” was last seen (by this editor... who “went walkabout” sometime late Friday afternoon) at around $1,985.

Of course, in paper money terms, gold is not the only thing going up...up... and away!

Across the board, commodities are on the march. Energy. Ags. Industrial metals. In London, nickel prices more than DOUBLED on Tuesday, crossing the $100k per tonne level for the first time ever before trading was temporarily suspended (prompting happy dances, and adult language, from some).

Zinc and tin also hit records ($4,896 a tonne and $50,510 a tonne, respectively.)

Now, what is this specter, haunting prices across the civilized world, you ask?

Ze Russians, of course!

Not rampant money printing. Not the sudden unraveling of a highly interconnected, highly financialized global marketplace. Not market uncertainty or collective fear. Not unintended consequences of knee-jerk sanctions imposed by the West. 

Just... Ze Russians... who, by the way, are a key supplier of the world’s nickel... which just happens to be a critical ingredient used in... wait for it... wait for it...

...lithium-ion batteries, the very same ones used in those electric vehicles you keep being told to buy, you know, in order to avoid the pain from rising gasoline prices. 

Reminds us of that old song... the leg bone’s connected to the, hip bone. The hip bone’s connected to the, da-da-da...

Needless to say, none of this will come as a shock to readers of these pages. Dan Denning and BPR Investment Director, Tom Dyson, have been calling for precisely this kind of “inflation volatility” for months now. And our old friends, Rick Rule and Byron King, predicted a “Winter Catastrophe” in the energy markets back in December, long before Mr. Putin’s misadventures in Ukraine exacerbated what we might well call a “pre-existing condition.” 

And yet, this may only be the beginning...

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Here’s a snippet from Tom’s mid-week investment update to paid readers this past Wednesday...

I don’t know what more I can do or say to convince subscribers that we are in the initial stages of a bear market and recession. 

I should add that we’re expecting this bear market to be far worse than most investors are prepared for or expect. I don’t believe most investors expect anything more than a temporary set back. And that it’ll be over in a year or so. That’s not what we’re expecting. 

Remember, our economic system only works when the markets are calm and the bubble’s inflating. As soon as things start unwinding – which is what’s happening now – it implodes. “Inflate or die,” as Bill Bonner calls it.

Traders start panicking. Rumors start circulating. Margins get called. Banks begin hoarding dollars and refusing to make loans. Pretty soon, wheels jump the rails and you get what’s called a “contagion.” That’s when the system seizes up and ceases to function.

I think we’re in the early stages of a contagion. Triggered by Putin’s invasion of Ukraine and the spike in energy and natural resources, the global economy is going to quickly fall into recession. This will lead to a banking collapse that starts in Europe and spreads around the world. 

Could we be looking at the end of the dollar’s reign as the world’s reserve currency? It sure seems like it. 

A financial system needs a neutral “money” for settling trade between nations. Since the second world war, we have used the dollar as this neutral reserve asset, even though the dollar isn’t “neutral.” The US can print it. By confiscating Russia’s sovereign reserves, the West has said, “not only do we have the privilege of being able to print the currency you hold as savings, but we can confiscate your savings if we choose.”

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The question begging itself at this point: what to do? Here at BPR, we’re keeping most of our powder dry… including stockpiling precious metals - mostly gold; some silver - and holding cash, with a sufficient supply in private storage and an emergency stash easily accessible, just in case S(really)HTF.

Other than that, Tom remains on the lookout for “Old Economy” value plays; companies dealing in the production, distribution and storage of real world goods that real people need to live… especially in really difficult times. There WILL be opportunities out there, but patience and prudence go hand in hand here.

As always, if you’d like to sign up for our paid research - which includes twice-weekly updates from Dan and Tom, as well as in-depth monthly reports, private Zoom calls with Bill’s trusted analysts and experts, Rick and Byron among them, plus plenty more - feel free to join us, here. No time like the present…

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And now for Bill Bonner’s missives from the past week...

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That’s all from us for today, dear reader. Feel free to like, share and leave any and all comments below…

And don’t forget to tune in tomorrow for your regular Sunday Sesh, where we’ll have more on Uncle Joe and The Vladiator, plus the price you’re (literally) being asked to pay “for your country” and plenty more...

Until then...

Cheers,

Joel Bowman