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The corpse of King Louis XV was still warm when his son and successor, 19-year old Louis XVI, started cleaning the royal house.

French finances were an absolute mess. The country was almost hopelessly bankrupt after decades and decades of costly warfare… and even more costly royal luxury. The young king’s predecessors, Lous XIV and Louis XV, spared no expense when it came to their comfort and grandeur, and the end result was the largest national debt in the history of the world up to that point.

Louis XVI knew something had to be done urgently. So, his first order of business was to appoint a brand new finance minister– the famed economist and philosopher Jacques Turgot.

Today we would describe Turgot as an economic libertarian; he believed in limited government, free trade, low taxes, low debts, and balanced budgets. And he came in at just the right time.

The year was 1774, and Turgot noted that the government’s annual revenue was 213.5 million francs, with annual expenses of 235 million francs– a deficit totaling 10% of tax revenue.

At the time, this was considered an absolute crisis. (The US, by comparison, hasn’t had an annual budget deficit of less than 10% since 2007!)

But Turgot got to work. Just like Elon Musk today proposes to have a “Department of Government Efficiency”, Turgot slashed spending anywhere and everywhere he could find it. He deregulated commerce, he abolished trade restrictions, and he grew both the economy AND government tax revenue… all without having to increase the actual tax rates.

Turgot’s success aside, the most important step was that the French actually recognized their financial problem in 1774.

But Americans today can’t seem to do this, even though the US government’s deficits are closer to 40% of tax revenue.

Data just reported from the Treasury Department on Friday shows a $1.833 trillion annual budget deficit for Fiscal Year 2024, which ended a few weeks ago on September 30.

That’s the third highest ever. And the only two that beat it were FY ‘20 and FY ’21—pandemic years.

But all the so-called “experts” claim this isn’t a crisis.

Bond investors, Wall Street banks, and even economists, if they do talk about it, say it’s a mild concern.

But politicians are the worst.

People like AOC come right out and say that deficits don’t matter.

A couple of years ago, Biden bragged that the annual budget deficit was only $1.3 trillion… as if that’s some sort of accomplishment.

The media is equally complicit. This is a five-alarm fire, and they’re acting like abortion access is the most important issue facing the country.

Not to downplay the abortion issue, but it affects maybe 900,000 people per year, versus 350 million Americans who are at risk of having their lives turned upside down by a collapse in government finances.

Yet when you watch the debates and coverage of the election this year, the national debt and budget deficit barely register as issues.

But this is something that isn’t even a political problem—it’s an arithmetic problem.

And it’s one that’s going to spiral out of control very, very quickly. I’ll explain how—

Government spending can be broken down into three main categories.

One, discretionary spending is the stuff Congress argues about every year through appropriations bill, i.e. the annual budgets for the military, national parks, the State Department, etc.

In FY ‘24, discretionary spending was about $1.8 trillion—basically the size of the entire annual deficit. That means you could cut ALL discretionary spending, including the military, and the government would still be running a deficit. That’s how bad it has become.

Two, mandatory spending is the largest category—programs passed decades ago that are automatically funded, like Social Security, Medicare, and welfare. These programs also automatically increase each year with inflation. Nobody wants to touch this stuff. No politician is going to take food stamps from poor people or mess with Social Security.

Third is interest on the debt. In FY ‘24, total interest on the national debt hit $1.1 trillion.

This has been increasing dramatically. Less than a decade ago, in FY ‘19, interest payments were $573 billion—now they’re twice that.

Going back further, interest payments accounted for 12% of tax revenue in FY ‘15, and that number has nearly doubled in less than a decade, to 23% of tax revenue today.

This spirals out of control fast. Tax revenue has been growing by 4.7% per year on average, while interest payments have been growing at 12.2%. It doesn’t take a math genius to see where this is heading—eventually, 100% of tax revenue will go to just paying interest.

Sure, there is some time before that happens, but exactly when should the government start taking this seriously?

Right now, the government borrows 100% of the money for its entire discretionary budget. Interest payments have surpassed the military budget for the first time in US history, and nearly a quarter of tax revenue is going toward interest.

Plus, nearly half of tax revenue goes to Social Security and Medicare, and that’s to say nothing of the defense budget, veterans’ benefits, and literally everything else the government does.

And they are still not taking the problem seriously.

But you know who is? Foreigners.

This is why central banks around the world are buying up gold, diversifying out of the dollar.

Will this trend continue? It looks like it.

The US government’s internal forecasts show another $22 trillion in debt over the next decade, with no plan or hope to get spending under control. That’s assuming there are no new wars, pandemics, crises, or bailouts—most likely, it’ll be much worse.

Foreign governments and central banks have over $8 trillion in US dollar reserves. Yet up until now, they’ve only converted a small portion of that $8 trillion into gold… driving the gold price to an all-time high.

What will happen to the gold price when the US government’s finances become a real crisis, and those same foreign institutions move hundreds of billions, or even trillions of dollars, into gold? What will happen to the value of the dollar?

Gold is already at an all-time high, and we think it’s going much, much higher.

But we also understand it’s tough for some people to buy an asset at its current all-time high, even though there’s a strong case that it can go much higher.

The good news is that gold companies, mining stocks, royalty companies, and other gold related businesses are nowhere near their all-time highs. In fact, some are trading at absurd discounts.

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It’s very hard to overstate just how obliterated the global economy was following World War II.

Europe was in ruins, with many major cities having been bombed back into the Stone Age. Japan had literally been nuked.

And just about every economy around the world that still had any manufacturing capacity was pumping out guns, bullets, and bombs; there was hardly any economic activity taking place that wasn’t somehow tied to the war.

It was sort of like Covid— the regular economy was shut down… and governments discovered very quickly that they couldn’t simply turn the global economic machine back on with the flip of a switch.

The transition from obliterated war economy to booming peacetime economy was an incredibly difficult one. So, in 1948, the United States (which was among the only developed major economy still standing) launched the Marshall Plan.

The idea was simple: America would shovel $13 billion (which, as a percentage of global GDP, is equivalent to around $5 trillion today) around the world to facilitate trade and economic redevelopment.

But alongside the financial aid came a promise: the US Navy would protect the seas, ensuring that the global flow of goods could continue unimpeded.

For decades, American naval dominance guaranteed a level of safety and stability that allowed international trade to thrive. Shipping routes were secured, costs remained low, and commerce could flow relatively uninterrupted across the world’s oceans.

The post-WWII era ushered in an unprecedented period of cooperation and prosperity, making international trade easier, faster, and more profitable.

But those calm seas are growing choppy again.

The war between Russia and Ukraine, for example, has drastically altered oil trade routes. Russian crude oil, which once flowed easily into Europe, is now making much longer journeys to places like India, where it’s refined and then sent back to Europe as diesel.

This convoluted, inefficient process is adding enormous strain and cost to shipping routes, increasing the “ton miles”, i.e. each mile that a ton of product must travel.

But this is just one example. In the Middle East, the Houthis in Yemen have launched attacks on vessels transiting the Red Sea, creating a new chokepoint in global shipping lanes. Pirates have increased their attacks in the area as well.

Many oil tankers are now rerouting entirely around the southern tip of Africa to avoid the Suez Canal, extending travel times significantly.

The further oil must go, the more tankers are needed. The problem is, these changes took place quite rapidly, yet shipbuilding is not an industry that can quickly respond to that demand.

Shipbuilding is a slow, capital-intensive process. And after years of underinvestment, there are hardly any new tankers being built. Shipyards are busy constructing other types of vessels, but the number of new oil tankers remains near record lows.

At the same time, a large chunk of the existing global fleet is over 20 years old, nearing the end of its lifespan. This imbalance is going to worsen before it gets better, leading to a serious shortage in oil tankers at the exact moment when the world needs them most.

The combination of more ton miles and fewer ships is creating a perfect storm in the tanker market.

This imbalance is inflationary. Both shipping and energy are core components of nearly every supply chain. Higher costs to transport oil mean higher costs for just about everything else we buy—from groceries to manufactured goods.

Climate fanatics can pretend that the world is ready to run off wind and solar, which is why they suppress investment in everything from new drilling, to transport ships. But the reality is, oil is still the most important energy source on earth.

Energy is a prime example of a real asset— a critical resource that keeps the economy going, and cannot be created out of thin air by governments and central banks.

And the shipping companies which transport that oil are real asset businesses… which is why we have been following this industry closely.

One company in particular that we told subscribers of our premium investment research stands out as being uniquely positioned to capitalize on these trends.

It has a fleet of 82 ships, with an average age of just over 10 years, meaning they have plenty of life left. They can also continue to benefit from the shortage of ships as long as it lasts— which we know from the global orderbook for new ships, will be several years at least.

But this also means the company won’t have to spend huge amounts of capital in the near future buying new ships. And already, it carries little debt… yet still pays around a 12% dividend.

Again, in addition to the dynamics of debt, deficits, and dysfunction in the US government which promise to increase inflation, global conflict is also inflationary.

This is another example of the real asset companies not only poised to do well in an inflationary world, but that are also trading near historic low valuations.

This shipping company, for example, is trading at a P/E (price to earnings) ratio of just 4.44.

While we can wish all we want that the world was not becoming less cooperative, that won’t change the reality. Better to position ourselves to benefit under these conditions, by investing in companies that actually gain from that disorder.

We’ve talked a lot about this same dynamic when it comes to gold, and why central banks around the world are turning to it, and away from the US dollar.

We also talked about it recently in relation to how the prices of certain critical metals have been artificially suppressed by climate fanatics who think the days of gas vehicles are past. They are wrong.

The best way to fight back, while inflation-proofing your future, is to invest in critical real asset companies at historic lows.

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Today’s letter is about how to go back in time.

A lot of us remember 2009 as a pretty tough economy. The whole world was in bad shape. Major banks had failed, panic had set in, governments were spending money hand over fist, and debts were rising fast. It was pretty brutal.

But if there’s anything nostalgic about 2009, it would be that, almost exactly 15 years ago, gold traded below $1,000 an ounce for the last time.

Today, the price of gold is hovering at its all-time high, more than $2,600 per ounce.

We’ve talked a lot about why that is. Central banks have been buying up physical gold, literally by the metric ton, primarily because they are looking to diversify a portion of their reserves outside of the US dollar.

And central banks are sitting on a LOT of US dollar reserves— more than $8 trillion.

It makes sense that they want to diversify. There’s so much more conflict in the world, and US global dominance is waning.

Iran is now flat-out threatening the US government and promising to retaliate if America provides military support to Israel. This would have been unthinkable even five years ago. But today, adversary nations have seized on the US government’s weakness. And foreign central banks— which, again, hold trillions of US dollar reserves— have noticed.

They’ve also noticed America’s outrageous national debt, and its annual budget deficits; in fact the most recent estimate by the Congressional Budget Office of the Fiscal Year 2024 is an incredibly $1.8 trillion.

So obviously these central banks see a clear need to diversify. And gold is one of the best and easiest ways for them to do that.

The gold market is big. It can handle tens of billions of dollars of inflows at a time. Plus gold is universally valued around the world with a 5,000 year history of maintaining its value. No central banker is worried about whether or not they’ll be able to liquidate their gold holdings in the future.

But central banks only buy physical gold, i.e. piles and piles of physical gold bars. They do not buy gold mines… or gold miners.

This is why there is a historic anomaly in front of us: the price of gold has soared to an all-time high. But many gold companies are laughably cheap.

This is pretty strange when you think about it; a gold miner’s revenue is denominated in… gold! And many of these companies are starting to see soaring revenues and record profits. Yet their stock prices are still languishing.

For example, one gold producer we profiled in our premium research is trading at a Price to Earnings (P/E) of just 4x. It has almost no debt. And it produces a ton of Free Cash Flow.

The company has even blown away expectations and managed to produce 100,000 ounces more gold than they had originally anticipated. Yet the stock price has barely budged.

What’s amazing is that the entire company is currently valued at less than the market price of that extra gold that it mined.

But the kicker is how little it cost this company to produce that gold.

Their “All In Sustaining Cost” (AISC)— everything spent to pull that gold out of the ground, from mining to processing— was less than $1,000 per ounce.

And in our view, buying shares in an efficient, profitable, deeply undervalued mining company with such a low cost structure is almost like going back in time to 2009 and buying up gold at less than $1,000 per ounce… especially given that the company still has millions of ounces of proven gold reserves in the ground which it has yet to extract.

I’ve written many times before— we still see significant upside for gold. Especially if Kamala is elected.

Based on the type of spending she envisions, plus her weak “vibes” and “joy” leadership, I don’t expect the dollar to last as the global reserve currency beyond her first term.

Instead, central banks will continue to turn to gold. And when central banks converted just $80 billion— about 1%— of their US reserves into gold, the price increased to over $2,600 a ounce.

What would happen to the gold price if they converted 5%… or 20% of their US dollar reserves into gold?

Even buying physical gold, right now, at all time highs, would probably work out really well.

But buying a company whose revenue is gold, yet costs a fraction of that price, could work out even better.

Gold is just one of the real assets we talk about in Schiff Sovereign Premium.

We’ve been clear that America’s debt problems can only be solved by lower interest rates and more money printing from the Federal Reserve.

That’s why we don’t believe inflation is behind us, and why we believe so whole-heartedly in the value of real assets— critical resources that cannot be conjured out of thin air by governments and central banks.

This gold producer is just one example of these massively undervalued real asset companies we’ve named in Schiff Sovereign Premium— a highly educational, month-by-month guide that is designed to help you navigate the world from a position of strength, both personally and financially.

You can click here if you want to learn more about both the Plan B strategies and compelling investment research we present.

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Over fifteen centuries ago, according to an ancient Sanskrit legend, a mythical Hindu priest named Sissa was ordered to invent a new board game to entertain the king of Taligana.

Sissa labored over the task for quite some time, but he eventually brought the King a military strategy game with a 64-square board and beautifully hand-carved pieces. Today we call this game chess. And according to the legend, the King was absolutely enamored with it.

So enamored, in fact, the King offered Sissa any reward he desired. So, the priest asked for a single grain of wheat to be placed on the first square of the chess board. Then two grains on the second square. Four grains on the third. Eight grains on the fourth. And so on.

The King of Taligana thought the request to be humble and cheap. After all, a little bit of wheat was nothing compared to the endless entertainment of this new game. So, he ordered his men to bring in the grain.

But as they continued counting, the numbers began to grow quickly.

One-quarter of the way through the board (sixteen squares), Sissa was owed around 131,000 grains– roughly four kilograms of wheat. No big deal.

But with every square the amount kept doubling. Halfway through the board Sissa is owed over 8 billion grains– about a quarter of a million TONS of wheat. And it keeps doubling from there.

By the final square, the amount of grain owed is far more than all the wheat that the world can possibly produce.

This is known in mathematics as exponential growth, i.e. when something grows at a faster and faster rate. Sort of like my kids. Or more ominously, the US national debt.

According to data just released by the federal government, interest on the national debt for Fiscal Year 2024 (which just ended last Monday, September 30) was roughly $1 TRILLION.

That’s just the interest bill.

And while that number itself is simply astonishing, it’s even more important to put it in context. $1 trillion is significantly more than the government spends on virtually EVERY other line item, including the military and Medicare.

In fact, Social Security is the ONLY federal program whose budget exceeds interest on the debt. For now. But within the next 5 years, interest on the debt will surpass even Social Security.

Just going back to FY 2020— which started pre-pandemic on October 1, 2019— the interest bill that year was “only” $345 billion. And in FY21, it only rose to $352 billion. That was just a $7 billion, or 2%, increase. No big deal.

But in FY 2022, it took a more significant jump to $475 billion. Then $660 billion. And now a TRILLION dollars.

So not only is the interest bill increasing, but the rate at which it is increasing… is increasing.

Just like grains of wheat on a chessboard, this is an exponential problem. At first it looks manageable. Even paltry. But around halfway through the chessboard, the problem starts to spiral out of control very quickly.

Technologist and author Ray Kurzweil actually refers to this phenomenon as “the second half of the chess board”, i.e. the part of the exponential growth model where the problem becomes too big to solve.

How did the most powerful nation in the history of the world reach this point?

For starters, a complete lack of discipline when it comes to federal spending. For decades now, the government has spent money as if there were no limit and would never be any consequences to increasing the debt.

This was most noticeable during the pandemic when they (and the media) engineered widespread fear and hysteria, shut down the economy, and then spent trillions of dollars to keep everyone afloat.

The national debt skyrocketed as a result. But at the time, interest rates were practically zero. So, the government’s borrowing costs were pretty negligible. That’s why the annual interest bill barely moved between FY2020 and FY2021.

But as you probably recall, rates soared in 2022. And so did the government’s interest bill.

Each year, in fact, much of the existing national debt matures; money that the Treasury Department borrowed five or ten years ago becomes due and must be paid back.

Naturally, the Treasury Department doesn’t have any money to pay back its lenders. So instead, they issue new debt to repay the old debt.

The problem, of course, is interest rates. The money they borrowed years ago was at 0% or 1%. Today it’s 4%.

Just this past Fiscal Year (2024) the Treasury Department refinanced roughly $5 trillion in debt at significantly higher interest rates… in ADDITION to the $2 trillion in NEW debt that they borrowed.

This means that NEXT YEAR’s interest bill will likely be even HIGHER.

You can see how this problem can quickly become a crisis. Again, five years ago the annual interest expense was $345 billion. Five years from now it could easily be $2 trillion.

Sure, the government’s overall tax revenue is also increasing. A bit. But the interest bill is growing much faster– at an exponential rate. You can’t have linear growth in your revenue and exponential growth in a major expense and expect to survive.

It appears that the US government has crossed the proverbial Rubicon into the second half of the chessboard. And their options are extremely limited.

On one hand, the government could slash spending, reform entitlement programs (like Social Security, welfare, etc.), and engage in a massive deregulation effort to boost economic productivity. But I’m not holding my breath.

Their other approach will be to increase taxes and print tons of money to keep interest rates artificially low.

This is already starting to happen.

The government released its new inflation data just this morning showing that core inflation is STILL on the rise. Inflation is not beat by a long shot. And yet the Federal Reserve is going full steam ahead in its rate cutting cycle.

Fed officials aren’t stupid. They know that 0% interest rates are the only hope for the US government’s financial survival.

And the chief consequence, of course, will most likely be some pretty nasty inflation.

This is why we keep saying that real assets make so much sense, i.e. crucial materials like metals, energy assets, and productive technology that are (1) useful and critical in the economy, and (2) cannot be created out of thin air by central banks or governments.

Historically, real assets perform extremely well and hold their value during inflationary times.

And the added benefit is that, right now, many of the businesses which produce real assets are at historically cheap levels. We’ll show you a great example tomorrow.

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Like most kids, I wanted to be an astronaut when I was little. Then a fireman. Then a pirate. Then a movie star.

My parents were pretty traditional so they hoped I would grow up to become a doctor. This is pretty typical; after all, parents just want their kids to be financially secure.

I think about this a lot with my kids— both of whom are extremely young. I give a lot of thought to what their world will look like in 20 years given the seismic geopolitical and macroeconomic shifts taking place.

America’s status as the world’s sole superpower is dwindling before our very eyes. The dollar’s role as the dominant global reserve currency is rapidly waning. And the rise of AI and robotics promises to upend just about every occupation imaginable, including white collar professional jobs which currently require advanced, outrageously expensive university degrees.

As my kids grow and develop, my plan is to focus on developing traits that machines cannot emulate, like genuine creativity, leadership, risk tolerance, big picture thinking, and bold decisiveness.

AI is a powerful tool they should learn to harness. But it will not be their master. After all, there’s a reason Captain Kirk was in charge of the Enterprise and not Spock.

However in terms of what the landscape for jobs or business opportunities might look like in a couple of decades, that’s anyone’s guess. I have no idea what will be the lucrative industries in a world where AI is pervasive.

In fact the only occupation I can think of which will provide absolute financial security is that of a union boss.

I’m totally joking of course. But in all honesty, being a union boss certainly seems to provide a cushy lifestyle these days. And as long as there are delusional leftists in our midst, there will always be fat cat union bosses to steal from their constituents.

For example, on Friday we highlighted that the man in charge of the dockworkers union— which briefly went on strike last week, makes about a million dollar per year, lives in a mansion, and drives a Bentley.

He’s far from alone.

Stacy Davis Gates, the President of the Chicago Teachers Union (CTU), pulls in nearly $300,000 per year.

Despite being in charge of the teacher’s union for Chicago public schools, though, she sends her child to a $16,000 per year private school.

As head of the union, Gates understands where the most important investments are made. The CTU is the largest single contributor to Chicago Mayor Brandon Johnson’s campaign fund.

Which is probably why Comrade Mayor Johnson routinely caves to the demands of the teachers union… including their newest demand for another massive (totally unaffordable) pay increase.

Bear in mind that the city has some of the worst performing schools in the country. It’s beyond outrageous.

And the CTU is against school choice; they want kids locked into attending the failing schools in their neighborhood, as opposed to giving parents the option to send their children to better schools elsewhere.

To add insult to injury, the school district already has a massive, bloated budget. The district’s total budget has increased over 97% since 2012. Yet over the same period, test scores in reading, math, and science have plummeted.

In other words, the more money the school district spends, the worse the outcome for the students.

The Chicago Teacher’s Union is totally oblivious to this reality, and they are now demanding more than $10 billion in new incentives and compensation… because they’ve clearly been doing such a great job.

Gates has already given the order to Comrade Mayor Johnson, so the wheels are in motion to bankrupt the city with CTU’s demands, and bankrupt the students’ future.

It’s pretty obvious that Ms. Gates is the one calling the shots in Chicago. Bear in mind, this is not an elected official. She’s a union boss. But she has the Comrade Mayor’s balls in her purse.

Not to be outdone, Gates’s counterpart at the national level is Randi Weingarten, head of the American Federation of Teachers (AFT)— the second largest teachers union in America.

In 2022, she said that parents concerned about critical race theory and gender ideology in schools were spreading “misinformation,” and added, “This is the way in which wars start.’’

So according to Comrade Randi, being involved and concerned about what your children are being taught in schools is the moral equivalent of Pearl Harbor.

By the way, she makes about $500,000 per year, plus massive benefits and incentives. And she, too, has the ear of some of the most powerful politicians in the country, including President Jill Biden and her husband Joe.

There are so many more examples about the power of union bosses.

I wrote recently about how a steelworkers union boss was able to get Jill & Joe to kneecap a competitor— and eliminate billions of dollars being invested in the distressed American steel industry.

The head of the FTC, Lina “Ghengis” Khan, routinely cites union concerns as she goes after businesses, even though her charter is to protect consumers, not unions.

Is this how you protect democracy? By ignoring consumers, shareholders, parents, and voters, and taking orders from unions?

These types of unelected special interests are exactly why the graft going, why the deficits keep rising, and why the national debt keeps increasing.

America is full of highly paid, out of touch union bosses who steal productivity, distort capitalism, and divert resources to their benefit.

Obviously they lie through their teeth and pretend that it’s all about protecting workers. But if that were true, wouldn’t ‘the workers’ already be so much better off because of all the great deals their unions have made?

Except workers are consistently worse off.

So their union bosses are either totally incompetent… or (and?) they’re totally full of shit and don’t actually care about the workers at all.

Probably both. The union bosses are in it for themselves— for the highly paid, cushy lifestyle where they’re never held accountable for their failures. They rake in absurd salaries and massive union revenue, then use the money to buy politicians.

It’s a horrendous circle where the unions keep corrupt politicians in office, then the corrupt politicians use their power to protect the union bosses.

How ironic that the so-called party of democracy is controlled by unelected, incompetent, corrupt union bosses.

And all this does is add to America’s already gigantic financial problems.

We’ll talk about those more in a couple of days when the Treasury’s annual financial report is published.

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If you’ve ever been on a road trip through Pennsylvania, Ohio, or Indiana, you’ve probably driven past a billboard advertising Amish furniture, quilts, or cheese.

You may have even driven past a horse and buggy, driven by someone who looks straight out of the 1800s.

The Amish are a Christian sect known for their simple, traditional way of life, rooted in 17th-century Anabaptist beliefs.

Rejecting modern technology, the Amish believe that innovations like cars, electricity, and smartphones make life too easy, undermining their core values of hard work, humility, and self-sufficiency. They emphasize strength of the community over the freedom of the individual.

Different Amish groups pick and choose which technologies are acceptable to preserving their way of life. Some may appear to be living in the early 1900s, with limited electricity and even a community phone connection.

But other, stricter communities may shun every technology created after 1850.

And in this way, it struck me, that the Amish are a lot like unions.

You may have heard that the International Longshoremen’s Association, the dockworkers’ union, went on strike earlier this week.

The initial strike only lasted a few days; the companies quickly gave in to their demands, not so much out of principal, but in large part due to political pressure from the White House.

There are still a number of details to be worked out, but as it stands right now, dockworkers will receive a 62% increase in pay over six years.

Obviously any worker should be free to negotiate maximum pay with their employer. And the employer should be able to hire and fire at will based on employees’ performance and skill. That’s how a free labor market works.

But I was pretty surprised to learn that starting pay for a dockworker is over $81,000 per year. And with the increase of 62%, it will bring an entry-level dockworker to $131,000 per year.

In fact, you’d be hard-pressed to find better paid blue collar workers. According to port regulators, more than half the dockworkers at the New York-New Jersey port were bringing in over $150,000, and close to 20% earned over $250,000 per year.

Over on the West Coast, the average full-time dockworker earns almost $233,000.

I find it pretty ironic that the national jobs report came out today, as the dockworkers struck a deal.

The headlines are about blowout job gains. But when you look deeper, you see that the quarter million jobs created were, as usual, bartenders, waiters, and government employees.

Manufacturing jobs were down. And even those factory workers still employed don’t make nearly as much as the longshoremen.

But although the strike has ended, negotiations have not. This is just a tentative deal that allows further negotiations until January 15.

And as if the absurd increase in pay wasn’t enough, dockworkers are also demanding a complete BAN on automation at the docks.

It’s a bit like the Amish; they want to reject new technology… though not for religious reasons or some statement on work ethic. It really comes down to protecting their jobs.

The Union bosses understand that the 62% pay increase will create strong incentives for the transportation companies to automate. AI, robotics, etc. will be a LOT more cost effective than paying people hundreds of thousands of dollars per year… with the added benefit that robots don’t unionize.

So the unions essentially want to get rid of the competition. This will keep prices higher at the docks… which ultimately passes on additional costs to consumers for everything from food to furniture.

Maybe Kamala and Joe Biden have a point when they blame inflation on “greed”. Except in this case, it’s not corporate greed. It’s union greed.

Like I said, I have no problem with employees demanding higher wages. That’s part of the most basic tenets of capitalism.

The problem is with corrupt union bosses who distort the market, make the world less productive, and drive higher inflation for everyone else.

Automation is exactly what America needs to pull itself up by its bootstraps, and get the economy humming so that its debt and deficit problems melt away.

But there are clearly some very politically powerful forces doing everything they can to stop that.

Given that Kamala’s administration pressured the employers to offer workers an enormous pay increase, I have to assume she cares more about cushy union jobs than bringing costs for consumers down, or spurring the US economy.

Adding to the irony of the poor dockworkers strike, is that the man with the megaphone, the head of their union, makes nearly $1 million per year, lives in a 7,000 square foot mansion in the suburbs of New York City, and drives a Bentley.

Both the Bentley-driving union boss, and the fact that Kamala sides with him, shows you exactly what type of leadership this country currently relies on.

Unfortunately, that makes it unlikely that the country starts moving in the right direction anytime soon. And that’s yet another reason is makes sense to have a Plan B.

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The “green energy” revolution is one of the biggest fantasies of today.

For example, they tell us that fossil fuels are going away, that the gasoline powered internal combustion engine is a thing of the past, and that everyone wants to drive an electric vehicle (EV).

Clearly, that’s why over 90% of consumers still choose gas powered vehicles…

So the government instead has to step in to mandate electric vehicle use, attempting to force manufactures to sell 50% electric vehicles by 2030.

They conveniently ignore the fact that the American electric grid cannot handle that kind of power demand.

And if the $1 billion per EV charging station Secretary of Transportation Pete Buttigieg is spending from the trillion-dollar infrastructure bill is any indication, we’re not going to get there in six years.

Meanwhile, auto manufacturers are actually scaling back EV production as demand slows and infrastructure gaps remain vast.

Governments and activists may wish it were otherwise, but fossil fuels are not going away for decades. Yet, the belief that they are has led to massive misallocations of capital into renewables.

We’ve talked about this in regards to oil, natural gas, and the uranium required for nuclear power. All of these energy assets have been ignored by investors, or demonized by activists and governments, despite remaining absolutely critical.

And the same thing is true of the metals necessary to build traditional internal combustion engines.

Mining companies are obsessed with finding more metals like nickel and cobalt for the “green energy” revolution. Meanwhile, the specific niche metals required for gas vehicles have been neglected.

I’m talking about platinum group metals (PGMs). These include six metals—platinum, palladium, rhodium, iridium, ruthenium, and osmium—renowned for their high melting points and corrosion resistance.

Over 80% of palladium and 90% of rhodium is used in gas vehicle emissions control systems to convert toxic gases into less harmful substances.

And it seems investors have believed the lies of the climate fanatics, assuming that demand for these metals will drop precipitously as everyone flocks to electric vehicles.

This ignores, first, the actual reality that people still prefer gas vehicles.

Second, the fact that hybrid-electric vehicles are actually the most popular alternative to gas-only vehicles.

And while the EPA-regulation wants everyone to drive electric vehicles, hybrids also satisfy its 50% mandate.

Already, hybrid vehicles account for about 25% of vehicle sales in the US. And they actually use more PGMs per vehicle than traditional combustion engine cars.

But the supply of PGMs is shrinking.

South Africa, the dominant producer of platinum and rhodium, has struggled with power shortages, labor strikes, and declining investment in its mining sector. Russia, another major player, faces sanctions and geopolitical uncertainty that disrupt its palladium production.

With these two countries controlling the vast majority of global supply, the market is heading for significant deficits in the coming years. The numbers are already telling: in 2023, the platinum market ran a deficit, and so far the same is true in 2024.

Despite this looming shortage, prices for PGMs have plummeted.

Palladium is down 66% from its 2022 highs, and rhodium has crashed by 80% since 2021. This collapse in prices has put major PGM producers on the back foot, forcing them to cut jobs, and even shut down some operations.

Investors, spooked by the drop, are shorting palladium at record levels, convinced that the future belongs to EVs. But they’re missing the bigger picture.

False narratives like these are one reason why many real assets are historically cheap right now.

Real assets are physical, tangible goods like certain commodities and natural resources which have intrinsic value tied to real world uses. This includes energy assets like oil and uranium, productive technology, and fertile farmland.

It also includes critical minerals and metals, like the ones we have been discussing.

Unlike financial assets and paper money, they cannot be conjured out of thin air by central banks and government. Which is why they protect wealth against inflation.

And the type of conditions present in the PGM market is a classic example of finding a historically undervalued real asset.

A crucial, critical resource with limited supply? Check.

A burgeoning shortage, with no movement in the markets to remedy it? Check.

A historically low price for the critical resource? Check.

That’s why this summer we wrote to subscribers of our investment research service, The 4th Pillar, about a company which mines PGMs.

But rather than traditional mining, it extracts these metals from tailings— the waste left over from other mining operations.

And that means it actually gets its source material delivered to it for free…

This company has a deal with a chrome miner for the exclusive right to process the chrome mine tailings. It gives back the recovered chrome, and keeps all the extracted PGMs for itself.

It’s a symbiotic relationship with no money exchanged, no profit share, and no royalty owed.

This low-cost, efficient business model has allowed the company to stay profitable even as PGM prices have cratered.

With a rock-solid balance sheet and minimal debt, it is perfectly positioned to weather the current downturn and capitalize when the market inevitably turns.

But again, this isn’t just the story of PGMs and vehicle markets.

Everywhere you look, real assets are historically cheap.

Often these same conditions exist— the market for a critical resource has been ignored by investors, or demonized by activists, cutting into supply, while demand stays steady, or even grows.

While frustrating, these lies create enormous opportunity. The best way to capitalize is by investing in critical real asset companies at historic lows. As inflation rises and markets correct, those who invest now stand to benefit immensely.

Source

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At a campaign rally earlier this month, President Trump promised that if he is elected, “We will keep the US dollar as the world’s reserve currency. It is currently under major siege. Many countries are leaving the dollar.”

What he’s referring to is the extreme privilege that the US has, i.e. that central banks around the world hold the US dollar in reserve as form of savings.

The entire world also conducts trade in US dollars. Since World War II, the vast majority of cross-border transactions among international businesses have been settled using US dollars.

Today, US dollars account for 54.8% of central bank holdings around the world. That’s still a lot, but it’s down from around 70% in the late 1990s, according to the latest IMF data.

And the US dollar is currently used for 42% of international trade, down from 52% in 2014, according to SWIFT, the Society for Worldwide Interbank Financial Telecommunication.

The dollar is still dominant, but it’s not a good trajectory.

This is a huge problem because, when foreign central banks hold US dollars, they generally do so by holding US bonds— which means they buy US debt.

With $35.5 trillion of debt, equal to about 123% of GDP, the US desperately needs big buyers of its bonds.

If foreigners decide to stop using the dollar, this ultimately means they won’t be buying as much US government debt… And the only real option at that point would be for the Federal Reserve to ‘print’ the money.

We all saw what happened when the Fed printed about $5 trillion during the pandemic— we got 9% inflation.

Well, the US government’s own conservative estimate is that it will take on another $22 trillion in debt over the coming decade. If the Federal Reserve had to print the majority of that, who knows how high inflation would go.

This is one of the reasons why it’s so important to the US economy that the dollar remain the world’s dominant reserve currency.

Trump is the only remaining Presidential candidate who is even acknowledging this massive risk for the US. (Bobby Kennedy also understood the issue, but he has effectively withdrawn from the race.)

But his solution doesn’t really cut it.

In the same stump speech, Trump says that he will threaten and bully countries into continuing to use the dollar. For example, if other countries say they want to “stop using the dollar,” then he could impose higher tariffs or even outright bans on imports of that country’s good and services.

But that doesn’t really work. The decision to use (or not use) the US dollar for trade isn’t made by Trump. Or Xi Jinping. Or most other world leaders and central bankers. It ultimately comes down to businesses and individuals to decide for themselves what currency to use.

If Apple decides that they want to pay TSMC (Taiwan Semiconductor Manufacturing Co) in New Taiwan Dollars, that’s a decision which those two companies will make between themselves.

And that sort of decision wouldn’t even be a high level executive, i.e. CEO or CFO level discussion. It would most likely be a mid-level manager in the finance or corporate treasure department.

They look at a number of factors, including what their vendor partners want, and what’s best for business— for example, accepting and holding certain currencies give higher rates of return.

These aren’t political decisions. They’re financial decisions. Business decisions.

Similarly, you could put your house on the market today and demand to be paid in Bitcoin. Or gold. Or perhaps a potential buyer is from Germany and wants to pay you in euros. It’s entirely up to the buyer and seller to decide on the settlement currency.

So the best way to keep the world using US dollars it not with threats, but through incentives. Much more carrot, much less stick.

In fact, threats are among the reasons why so many places around the world are interested in finding an alternative to the US dollar.

But if, on the other hand, the US government was just a little less dysfunctional, and engaged in a little more cooperation…

If politicians weren’t trying to imprison rivals from the other party, if they could recognize problems, compromise on sensible solutions, stop spending so much money, and keep the currency from suffering high inflation…

Then the world would be a lot more interested in continuing to use the US dollar. There would be a lot more trust and confidence in the US financial system.

But that doesn’t seem to be on too many people’s agenda.

It’s because of that, we anticipate the dollar will continue to lose share of global reserves, leading to (as I wrote above) more debt and inflation.

Certainly there are a few, limited scenarios in which that outcome can be avoided. And one can hope. But I’m not holding my breath.

That’s why is makes so much sense to have a Plan B.

Think about it— even central banks have Plan B. That’s why they’re buying up so much gold.

Over the past couple years, they have traded about $80 billion worth of excess US dollar reserves for gold, and that has driven the price of gold to an all time high.

Just imagine what will happen to the gold price if they buy another $300-400 billion…

Bear in mind central banks around the globe currently hold about $8 trillion in US dollars.

Converting just 5% of that to gold could easily make the price shoot past $10,000 an ounce.

And that may just be the beginning.

Source

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Let’s play a game. I’ll give you some recent headlines, and you guess the well-known magazine.

• Here’s What the ‘Manosphere’ Gets Wrong about Cuckoldry
• How a Zombie Law Could Ban Abortion Nationwide If Trump Is Reelected
• Meet the New Autocrats Who Dismantle Democracies from Within
• Finding Math’s Beauty and Power with Drag Queen Kyne Santos

Where do you think these come from? If you guessed Teen Vogue, or even Newsweek, it would be understandable. But incorrect.

No. These headlines are from one of the premier “science” publications in the Land of the Free— Scientific American. And we didn’t even have to comb through years of articles to cherry pick those few. In fact everything we listed above was just from the last few weeks.

This is why it’s so hilarious that Scientific American endorsed Kamala Harris last week; they wrote “Vote for Kamala Harris to Support Science, Health and the Environment.”

So the publication which thinks sex fetishes, abortion, drag queens, and left wing political ideology count as “science” believe that Kamala is the pro-science candidate. Hilarious.

Even the few articles that are actually about real science have a woke, leftist bend. For example, one article is “Florida Surgeon General Spreads COVID Misinformation in Booster Guidelines.”

They go on to slam the state’s top public health official for telling people that new COVID boosters have not been widely tested on humans. So Scientific American decided that he is spreading misinformation… even though (quite bizarrely) they acknowledge in the very same article that the boosters have not, in fact, been widely tested on humans.

It’s especially ironic because one of the only other articles dealing with science is a story about a heroic scientist from the FDA who stood up against the “consensus” among the medical community in the 1960s.

Back then, all the “experts” believed that an untested drug called thalidomide was safe. This one woman questioned the science. And she was right— thalidomide caused monstrous birth defects when it was administered to pregnant women.

So, according to Scientific American, a woman who raised awareness about an untested drug is considered heroic. But Florida’s Surgeon General who is raising awareness about untested booster shots is spreading misinformation.

This double standard appears completely lost on them.

And speaking of double standards among leftist buffoons, the greatest investor of all time scored another big win recently.

Forget Warren Buffet. I’m talking about Paul Pelosi (husband of the former House Speaker and current Congresswoman from San Francisco, Nancy Pelosi) whose track record is virtually unbeatable.

This guy just has a special knack to sniff out amazing investments.

For example, Mr. Pelosi famously purchased very high-risk call options in Microsoft back in 2021; less than two weeks later, Microsoft announced a $22 billion contract with the US military… and Pelosi made an enormous profit.

It must have been a crazy coincidence.

Similarly, he loaded up on more high-risk call options of various semiconductor stocks in 2022, shortly before Congress announced the CHIPs Act (which poured billions of taxpayer subsidies into those same companies.) The companies’ stock prices soared, and Pelosi made a ton of money.

Another crazy coincidence for sure.

Just recently, Paul Pelosi decided to sell about $500,000 worth of Visa stock. And wouldn’t you know it— this week the Justice Department announced an antitrust lawsuit against Visa for illegally monopolizing the debit card market.

Visa’s stock price tumbled. But hey, Paul Pelosi had already sold. Incredible timing on his part… which, once again, must be a total coincidence.

Apparently everyone in the Washington establishment believes this to be true, because there has never been any serious investigation into the Pelosi’s potential impropriety. And if anyone so much as suggests that Pelosi has used her position for personal gain, it’s immediately labeled as “disinformation” or “misinformation.

New York City Mayor Eric Adams probably wishes for the same special treatment. Yet Adams was indicted this week on corruption charges for using his office for personal gain. I read the 57-page indictment, and the evidence against him is strong.

But the evidence against Pelosi is also strong. As is the evidence against “the Big Guy” profiting from Hunter Biden’s deals in Ukraine.

All of these people have long histories of improperly benefiting from their offices. And they’re all wrong. All of them. Yet only Eric Adams has been charged… which is pretty ironic for a party that claims to champion anti-racism.

They’re sending the black dude to jail while the old white people get to continue ripping off the public. Eric Adams is a criminal. But Paul Pelosi is the greatest investor of all time.

Just like Scientific American, the double standard is completely lost on them.

Source

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In the 6th century BC, during the reign of Nebuchadnezzar II, Babylon flourished as a center of power, culture, and commerce.

We know this because the Babylonians were exceptional record keepers. And they chiseled everything down onto cuneiform tablets, many of which have survived through today.

Sadly the tablets aren’t tabloids. They don’t contain any juicy gossip or colorful stories of ancient times.

But they do offer extremely detailed– though often boring and mundane– records of everyday economic transactions, legal contracts, and administrative activities.

Just like future historians centuries from now should easily be able to see this evening’s closing stock prices for Apple and Tesla, we can also read about daily grain prices in ancient Babylon.

One important tablet from the reign of Nebuchadnezzar II highlights the interchangeability of gold and silver in Babylonian commerce. It records a transaction where 5 shekels of silver were considered equivalent to half a shekel of gold.

(The shekel was an ancient unit of weight approximately equal to 8.33 grams.)

This exchange rate implies a silver-to-gold ratio of 10:1.

The formal establishment of fixed exchange rates between gold and silver took a significant leap under Darius the Great in the mid-6th century BC.

Ruling over the vast Achaemenid Empire, Darius borrowed the concept of minting coins from the Lydians and introduced a bimetallic standard. He decreed that one gold “daric” coin was equivalent to 20 silver coins, creating one of the first examples of an official, fixed silver-to-gold ratio.

Over time, the ratio fluctuated due to advancements in mining techniques and changes in supply and demand. And by the era of Alexander the Great in the 4th century BC, the ratio had shifted to 13:1.

Similarly, in ancient Rome, Julius Caesar established a 12:1 ratio.

Even in the early history of the United States, The Coinage Act of 1792 legally defined the US dollar in terms of specific weights of gold and silver—1.604 grams of pure gold or 24.1 grams of pure silver—establishing a ratio of approximately 15:1.

 

Of course, today, the silver-to-gold ratio is whatever the market decides. Ever since the dollar was removed from the gold standard more than five decades ago, the market ratio between silver and gold has ranged from about 25:1 all the way up to 120:1. Right now it is about 85:1.

Many people have an idea about where this ratio should be. Some people think that it will inevitably fall back to 50:1 which would price silver at around $53 per ounce.

Silver could certainly rise to $53 and far beyond. But not because of some preordained ratio.

Remember, there is no fixed rule or law regulating the silver/gold ratio. There’s nothing stopping it from rising to 500:1.

And frankly I think it’s likely the ratio could rise much higher from its current 85:1.

Just think about the catalysts that could drive both gold and silver prices much higher.

Gold prices over the past few years have been pushed to all-time highs by central banks. And as I’ve argued, this is a pretty clear sign that they anticipate moving on from the US dollar as the global reserve currency.

As the US national debt continues to explode higher and the federal government appears increasingly dysfunctional, it’s becoming likely that the US dollar’s global dominance could come to an end within the next several years.

What does the post-dollar global financial system look like? What will the next reserve currency be? No one knows.

And that’s why central banks are buying gold. Because they have $8 TRILLION worth of US dollar reserves that they need to convert into something of value.

Gold, for now, represents that value. So central banks are buying it by the metric ton.

But (with minor exception) central banks do not buy silver. The market is too small, making it extremely difficult to invest billions of dollars all at once.

Silver prices are influenced more by industrial demand… and investor speculation. I’ll come back to that.

I’ve said before that a Kamala victory will likely spell the end for the dollar’s reign. This is a person who thinks that inflation is caused by “greed” and whose answer to every problem is more government spending.

 

The Harris deficits and inflation will likely be the proverbial straw that breaks the dollar’s back. And the consequent surge in central bank gold purchases could easily send the silver/gold ratio soaring past 200 or more.

Again, while 200 is far beyond the historical average, there’s no reason why it can’t be even higher. Historical averages are merely data points, not firm rules.

It’s far more important to pay attention to price catalysts. And gold has a major catalyst in central bank purchases.

That doesn’t mean the price of silver won’t rise. In fact, a climbing gold price alone is very like to increase the price of silver, simply because investors will speculate that it will rise.

This becomes somewhat of a self-fulfilling prophecy; investors buy an asset believing that it will rise. That increased demand causes the price to rise, encouraging more investors to buy.

We’ve seen this type of feverish speculation with plenty of asset classes in the past– including silver more than a decade ago.

But in the end, if there aren’t real demand fundamentals to support the price, the speculative mania always fades.

Bottom line, gold has clear demand from central banks that could send the price to absurd levels. Silver does not share the same catalyst.

Silver prices could absolutely skyrocket. But this would be far more likely due to temporary speculation (and those buyers tend to be finicky and sell quickly) rather than from true long-term industrial or investor demand.

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