March 12, 2020
The coronavirus, as many health experts are now stating, is beyond the point of containment in North America, if not the entire world. This is unfolding in real time, and as I have said for over a month now, the economic ramifications will be of historic proportions.
As Dr. Scott Gottlieb, the former head of the Food and Drug Administration, recently stated, the best we can hope for now in the West is that we slow down the rate COVID-19 is spreading, prolonging the lifespan of the virus but enabling our healthcare systems to handle the monumental workload about to come their way, saving countless lives in the process.
Unfortunately, this is going to come at a cost. Businesses around the world are already feeling the pinch through a greatly reduced supply chain, thanks to the impact the coronavirus has had on the Chinese manufacturing sector. However, the real pain has yet to be felt.
Next comes the quarantines, closures, and most importantly, the self-isolation phase, which has the potential to bankrupt many small-to-medium size businesses that won't be able to weather the storm due to a greatly reduced cash flow.
Large businesses, particularly the ones that Western governments deem "too big to fail", will be bailed out in the coming months if need be.
The precedent for this has already been set by the 2008 crisis, and you can expect that the Federal Reserve and other Central Bankers around the world will rev up the imaginary printing presses, printing that sweet, sweet digital fiat currency in illusionary bucket loads.
Never before has it been easier to enact quantitative easing than in the present day. Everything is digital, including the vast majority of our fiat money supply.
Add a zero here, add a zero there, and poof! More money.
Issue some more made-up-out-of-thin air Treasury Notes, problem solved... Well, at least in the short term.
Already, we can see this unfolding in front of our very eyes.
In what can only be described as a dramatic attempt at "shock and awe", the Federal Reserve has gone "full force", pumping an extraordinary $1.5 trillion of " Not QE" into the system.
(Chart source, Zero Hedge)
This is being done in response to a complete and utter meltdown in the global markets, as the coronavirus continues to spread seemingly unchecked throughout the West, with containment, as previously mentioned, well past the point of no return.
What is even more shocking is the fact that this comes on the heels of the Federal Reserve pumping hundreds of billions of dollars into the overnight repo markets already this week!
(Chart Source, Federal Reserve)
The last update that the Federal Reserve balance sheet received was on March 4 th. Therefore, the already rapidly-rising Fed balance sheet is soon to receive another drastic spike higher in the coming days with this latest injection into the markets.
Clearly, this is "Not QE". Not anymore.
Additionally, not to be outdone, other governments around the World are stepping up to the plate, taking action and putting into place their own forms of quantitative easing in hopes of combatting the economic fallout from the coronavirus.
A quick search on Google turns up countless stories highlighting how much fiat money is soon to be artificially injected into the system.
(Chart source, goldprice.org)
And like clockwork, both gold and silver bullion are being hammered lower in price, following in tandem with the general crash in the markets.
This is happening as people scramble for liquidity. However, just as when the dust settled after the 2008 crisis, precious metals are destined to move higher as the weak hands are flushed out and the smart money solidifies their positions into safe haven assets. This will push bullion prices higher as they account for the historic amount of QE that will soon be injected into the system.
This storm is far from over. However, this does not mean that you will not weather it. On the contrary, the vast majority of us will be perfectly fine. Cooler heads will prevail above all others.
Be smart, get prepared, mind your personal health, and as always, keep stacking.
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