Welcome to another exciting edition of Black Coffee, your unusual weekly digest of what’s going on in the world of money and personal finance.
Well… another busy week is behind us. So with that in mind, let’s get this party started!
Just because you got the monkey off your back doesn’t mean the circus has left town.
– George Carlin
Credits and debits
Credit: Have you seen this? In 2016, an Italian artist created three fully functional ones 18 carat gold toilets. No, really. One was stolen shortly after being installed at Blenheim Palace. The good news is that for people looking to buy a toilet made of gold, one of the remaining two will soon be auctioned in New York City at Sotheby’s. The toilet weighs 220.5 pounds – that is, 2411 troy ounces of pure gold and the estimated starting bid is $10 million. And we thought the housing market was out of control. The good news is that those in power are working on ‘solving’ that problem…
Debit: Meanwhile, stress levels within American households are increasing, as evidenced by: 29% decrease in consumer confidence from the previous year – that is the lowest consumer confidence in almost three years. Uh oh.
h/t: @roots_n_reason
Credit: Speaking of stress, according to macro analyst Jesse Colombo: “the stress builds up beneath the surface of the US financial system, as evidenced by overnight (cash) demand from banks that reached $29.4 billion on October 31. A similar development took place in September 2019 and ultimately played a key role in the Fed’s launch of the major quantitative easing (QE) programs introduced just months later under the cover of the COVID-19 stimulus.” Again, we all know how That elaborated. Oh…and speaking of couch movies we’ve seen before…
h/t: Jesse Columbo substack
Credit: As macro analyst Daniel Oliver noted this week, “Every time the Fed tries to get off the exponential growth curve of money, there is a financial crisis. crossed the border Again, and the Fed’s repo lines are already ramping up – last Friday it had to inject $80 billion into the banking system.” Maybe that’s why the current administration is floating their latest trial balloon…
h/t: Myrmikan research
Debit: Needless to say, even without QE, the US money supply (M2) keeps climbing – and the pace will only increase once the Fed restarts its quantitative easing, which they now suggest will begin within the next few months. We can only imagine how much worse our financial and monetary systems would be without the wise guidance of the ivory tower academics who run them.
h/t: Jesse Columbo substack
Credit: In other news, macro analyst Doug Casey noted this week: “Most of the money made in recent generations has ended up in the financial markets, and not by creating real industry and real wealth like Carnegie, Vanderbilt and Rockefeller did. This is because the top US exports since 1980 have not been computers, or Boeings, or soybeans – they were US dollars (USD). The trade deficit is now almost $1 trillion a year – and that USD outside America (is) American debt.” And it’s only a matter of time before these commitments result in painful spasms for the US financial system. Oh… and speaking of cramps…
Debit: By the way, Casey also notes, “If foreigners want to dump those USDs, they will come back to America to buy real goods – company stock, buildings, (and) farmland. And when that happens, the amount of real wealth Americans own will plummet, while the amount of fiat USDs in the country will explode.” Yes. Unfortunately, that will come as an ugly surprise to the vast majority of the American middle class. In fact, by the time they finally recognize it what really happensthere will be no options left to effectively deal with what lies ahead. Well, except this:
Credit: With all this in mind, no one should be surprised that gold is up more than 50% this year, while silver is up this year. almost 70% in 2025. As Sprott’s precious metals analyst Paul Wong notes, “investors are increasingly recognizing that the US, Europe and Japan are unlikely to rein in public debt and will instead expand budget deficits to even higher and more worrying levels. These economies are entering a state of fiscal dominance, in which budget priorities determine monetary policy rather than the other way around.” Uh huh. And while that’s bad news for those who are financially unprepared, remember that there is actual business involved existential there are also problems…
Credit: Those who maintain that the USD gold price is actually in a bubble should keep in mind that during the secular bull market of the 1970s, gold, as measured against the M2 money supply, rose 888% in 113 months. During the secular bull market of the 2000s, the price rose 305% in 125 months. By comparison, today’s secular gold bull market is on the rise only 140% in just 36 months. One thing’s for sure: the billionaire hedge fund manager isn’t worried about gold being in a bubble – and for good reason:
Credit: We close this week with James Howard Kunstler, who points out that rising “precious metals (prices) send a distress signaleven while (stock) markets worldwide are melting. That must be a bad combination. Something goes wrong with (fiat) money everywhere. The overarching question is: will it be worth anything? Money becoming increasingly worthless leads to the worst social and political outcomes imaginable.” Indeed it does. Let’s hope the authorities reject the current moribund debt-based monetary system and replace it with something fairer before either of these outcomes actually materialize. Got gold?
By the numbers
At a time when many people are worried about their financial future, a new survey finds that nearly two-thirds of Americans say they would enjoy the holidays more if people didn’t exchange gifts. The good news is that you can buy popular gift cards at a discount, helping gift givers save money. With that in mind, here are the five gift cards with the biggest discount percentages:
6% Sonic
7% Dairy Queen
12% Old Navy
22% Starbucks
22% Michaels
Source: WalletHub
The question of the week
The result of last week’s survey
Did you play sports in high school?
More than 1,900 Len Penzo dot Com readers answered last week’s survey question and it turns out that a slim majority of you it didn’t participating in at least one sport during high school. As for me, I played on the high school golf team for three years. Unfortunately for me, that was also when my skills in that sport peaked. I had an 8 handicap and even got my first – and only – hole-in-one while on the team. It was the only period where I could break 40 over nine holes. Nowadays I’m just a miserable hacker – which is why I rarely play anymore!
If You If you have a question that you would like to see here, please send it to me Len@LenPenzo.com and be sure to include “Question of the Week” in the subject line.
Useless news: the life of a pirate
A pirate walked into a bar and the bartender said, “Hey, I haven’t seen you in a while. What happened? You look terrible!”
“What do you mean?” said the pirate. “I feel fine.”
“Well… what about the wooden leg?” the bartender asked. “You didn’t have that before.”
“Oh, that.” said the pirate. “We were in a battle off the coast of Tripoli and I was hit by a cannonball, but I’m fine now.”
“Okay,” the bartender replied, “but what about that hook? What happened to your hand?”
“We were in another fight off the coast of Morocco; I boarded a ship and got into a sword fight. My hand was cut off. When we got back to port I got the hook. But I’m doing really well.”
“And what about the eye patch?”
“We were at sea, on the tail of a Spanish galleon,” the pirate explained. “Suddenly a huge flock of birds flew overhead. When I looked up, one of them startled me.”
The bartender was in disbelief. “You’re kidding, right? You want to tell me you lost an eye to some bird poop?”
“Well,” said the pirate, “it was my first day with the hook.”
(h/t: Bill)
Squirrel Cam (In the dark)
This week we had a special evening visitor who stopped by to say hello…
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More useless news
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Letters, I get letters
Every week I post the most interesting question or comment, that is, if I get one. And people who are lucky enough to have the only question in the mailbox will get their letter marked here, whether it is interesting or not! You can reach me at: Len@LenPenzo.com
After reading my article on 36 Great Uses for Plastic Grocery Bags, Felicia Luburich shared a clever – albeit somewhat unrelated – tip of her own:
Use glossy coupon pages to pick up dog poop.
Great idea! I use two-for-one coupons so I can pick it up twice as fast.
If you enjoyed and found this edition of Black Coffee informative, please forward it to your friends and family. Thank you! 😀
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Photo credit: stock photo
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