On this year’s Leap Day, Peter analyzed another round of inflation data and the economic factors at play in the quickly approaching 2024 general election. Bitcoin also surged back above $60,000 after the SEC approved bitcoin ETFs. Inflation came in worse than expected for personal consumption, and gold finished the week at nearly $2090/oz.
Peter thinks Bitcoin’s revival this week is the last gasp of breath before the asset blows up completely:
“These ETFs are really the tail that is wagging the Bitcoin dog. I think it’s all now about the ETFs, and of course, Bitcoin lives by the ETFs, it’s going to die by the ETFs and [it’s] probably not going to be a very long life.”
Investors eagerly buying into these ETFs may have a tough time moving back into gold if the yellow metal continues to climb in price:
“It’s going to be like a…roach motel. The money checks in. It doesn’t check out. It goes to money heaven because it’s one thing to put money into a Bitcoin ETF. It’s going to be a whole other thing to get it back out.”
With new home sales and durable goods orders declining faster than expected, Peter explains the bizarre state of the housing market:
“[Housing] prices are still up, even though the interest rates are up. It’s an unprecedented situation that makes housing extremely unaffordable and means that more people are stuck renting, no matter how high the rent goes.”
All of these factors weigh on voters’ minds at the ballot box, and so far, Biden has received most of the blame:
“This also confirms what I’m saying, and what the voters are saying: the economy is lousy. The reason that Biden is not getting credit is because he’s getting the blame. …Whether it’s Biden’s fault or not, the voters know the economy is lousy. They can’t afford to eat, and they’re working two or three jobs. And they’re blaming Biden, and they’re hoping that maybe things will be different under Trump.”
Meanwhile, the markets have placed their bets on the presidential contest:
“Donald Trump is a better bet to win than Biden. So the markets say that Trump has a better chance of becoming the next president than Biden. But the betting markets also say that it’s more likely that a Democrat wins the White House than a Republican. So what are the markets betting? The markets are actually betting that Biden doesn’t run and that somebody else takes his place. Because the only way Trump is going to lose is if he’s not running against Biden.”
The only promising figures released this week were on personal income and spending, although Peter argues they’re hardly worth celebrating:
“Now normally, hey, that’s good news, right? People are earning more money. But they didn’t really earn more money. They received more money from government transfers. The big source of that 1 percent gain was government transfer payments. Mainly social security. … So some people on social security got a bigger check.”
Because this income was created by the government, it’ll likely make inflation worse:
“I don’t think that people on social security are going to save that money for long. They’re going to spend it. It’s just taking them a little longer to get to the store. So this is not good news. … This new spending power came into existence, not through effort and work, which would be productive and help to increase the supply of goods. It’s just people collecting money that the government created out of thin air. So it’s inflation.”
With gold stocks down this week and gold holding steady above $2000, now is a great time to buy the dip in gold stocks before the economy gets even worse:
“So we’ve got weak economic data, strong inflation data. We’ve got a bubble in the stock market. We’ve got a bubble in crypto. We’ve got a great opportunity to fade that trade, to bet against that bubble. All bubbles ultimately pop. It’s just a question of when and what’s the pin.”
The coming months will be crucial for the economy. As inflation continues to hang on and important indicators keep falling, precious metals stand out as a great defense against a weakening dollar and asset bubbles in the broader economy.
