By Sean Kelly

When hockey legend Wayne Gretzky said, “I skate to where the puck is going to be, not to where it has been,” he was spilling a secret of his success.

It is important advice for investors and those seeking to secure their long-term wealth and retirement to follow now, with the monetary world headed to a crisis.  It is a crisis characterized by an explosion of deficit-financed government spending and a global binge of money printing.

Let us share a graphic of both.  This chart shows the annual deficit.  Things started to get serious when the deficit first exceeded $100 billion in 1982.  But now you can see that things have fallen off a cliff.

In the fiscal year that ended ending in September 30, the deficit was $3.141 trillion!

Federal Deficit

Where is all this going?

With the recipients of government largess lined-up for their share in our spoils system democracy, all we can say today is that this year’s deficit is already starting to spiral out of control.  In September, the Congressional Budget Office estimated red ink this year would total $1.8 trillion.  That expectation is already outdated.  The Committee for a Responsible Federal Budget estimates today, just four months later, that the deficit for the current accounting year will total $2.3 trillion.  But it is still early; the new administration has not even been sworn in.  Biden’s $2,000 stimulus promise alone will cost $400 billion.  Outgoing Treasury Secretary Mnuchin says he does not know where the Biden administration will get that money.

But we know.

It will come from Fed money printing.  Last year the Fed printed $3.2 trillion.

Total Assets

We are among those that expect the Federal Reserve to print another $3 trillion this year to help Washington fend off insolvency, running Fed assets (the amount of financial instrument like US Treasury bonds that the Fed buys with made-up money) to $10 trillion.

These are among the factors that continue to destroy the dollar. These are the dynamics that cannot be reversed.  These are the reasons gold will move higher.

We do not want to overload anyone with more numbers and projections.  Our objective is to show you where things are headed, so we will end with this long-term chart of the dollar’s purchasing power as measured by gold.

US Dollar Purchasing Power

Except for the Civil War, the dollar’s purchasing power more or less held up until President Franklin Roosevelt declared that American citizens’ ownership of monetary gold was a felony punishable by imprisonment.  That sent the dollar plummeting in 1933.  The next event, President Nixon’s ending any semblance of a gold-backed dollar in 1971, kicked it over the next cliff.

Today, with no redeemability in anything, indeed nothing but a confidence game to provide buoyancy to the dollar, you can see where the puck is going to be.

We urge you in the strongest possible terms to take steps now to protect yourself, your wealth, and your retirement with precious metals.

Things are moving very quickly.

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