Palisades Gold Radio, Released on 7/1/21
Talking Points From This Episode
– Why the Fed’s policies are deflationary.
– Why hyperinflation is still a few years out.
– The energy cliff and risks around societal collapse.
– The outlook for precious metals in a world with limited energy.
Time Stamp References:
0:00 – Introduction
0:38 – The Deflation Case
4:24 – Bank Lending Rates
6:48 – Equity Markets
7:56 – The Liquidity Trap
10:50 – Asset Inflation?
12:56 – Energy Cliff
15:56 – 1970s – Oil & Miners
19:16 – Bronze Age Parallels
21:45 – Oil Prices & EROI
24:37 – After the Cliff
28:47 – Global Supply Chain
31:46 – Foreign PM Imports
35:38 – ETFs and Demand
37:44 – Silver Prices
39:32 – Bearish Candlesticks
40:50 – Manipulation & T.A.
43:33 – Miner Margins
45:04 – 12 Month Outlook
48:03 – Concluding Thoughts
Tom welcomes back Steve St. Angelo of the SRSrocco Report. Steve explains the Fed’s Treasury purchase isn’t money creation; instead, they destroy it. Therefore, QE is not inflationary as many believe. This process is supposed to lower rates and thus increase public borrowing. However, QE is destroying money velocity and gradually ruining the economy.
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Steve believes we’re entering a deflationary period, and we see this occurring in assets like lumber and probably oil and steel before the end of the year. The pandemic caused supply change disruptions, not unlike a hurricane, but it will recover.
Once we go through this deflationary period, we will see a decline in the equity markets as economic activity slows due to stimulus programs ending. Steve expects hyperinflation will still be a few years out.
Steve points out that most homeowners in the US have massive exposure to equities. More so even than during the Housing and Tech bubbles.
Most countries have reached peak oil, and further declines are unavoidable in the coming years. Oil is needed to extract oil and used in making almost everything. When oil gets into trouble, so will everything else, and this will be inflationary for goods, assets, and energy. Likewise, inflation in the 1970s was all related to the cost of energy.
Steve discusses some historic energy crises that occurred during ancient times and the ramifications. The collapse of the bronze age was due to energy shortfalls. He argues we are nearing the end of the oil age. Energy is the driver of the economy, but we can’t have growth unless there is oil production growth. The more complex a society becomes, the closer it comes to collapse.
Silver looks bearish in the short term, and a close above $27.50 is needed for a new breakout.
The energy cliff will bring metals prices far higher since they represent true wealth. The world is going to transition from building wealth to protecting it. Energy drives everything, and without energy, there is no economy.
Independent researcher Steve St. Angelo (SRSrocco.com) started to invest in precious metals in 2002. Later on in 2008, he began researching areas of the gold and silver market that, curiously, the majority of the precious metal analyst community have left unexplored. These areas include how energy and the falling EROI – Energy Returned On Invested – stand to impact the mining industry, precious metals, paper assets, and the overall economy. Steve considers studying the impacts of EROI one of the most important aspects of his energy research. For the past several years, he has written scholarly articles in some of the top precious metals and financial websites.