Integrity.
If we had one word to describe Teeka Tiwari, that would be it: integrity.
For the past four years, I’ve been behind the scenes, working as Legacy Research’s Editor-in-Chief… looking after the folks who are responsible for the thousands of words of content we publish every day.
During that time, we’ve seen firsthand how Teeka approaches this business and his attitude towards his subscribers. Everything he does is with the utmost integrity… and ensures the business puts the subscriber first.
You’ll see that shine through in his guest essay today. Teeka calmly and factually explains one of the biggest threats facing Americans, and importantly, the easy solution to help avoid it.
Read on. This is an essay (and a solution) you’ll want to keep coming back to so you can remind yourself of the significance of these events. First, let’s take a look at how the market did today…
Market Data
The S&P 500 closed up 0.9% to end the day at 4,358.34… the NASDAQgained 1.4% to close at 13,478.28.
For individual stocks, Microsoft closed up 1.3% to $352.80… Apple ended lower by -0.5% at $176.65… and Tesla ended the day at $219.96, a 0.7% rise.
In commodities, West Texas Intermediate crude oil trades at $80.95… gold is $1,999.80 per troy ounce… and Bitcoin is $34,593.47.
And now, back to our story. Here’s Teeka…
The demand is so strong, Costco can’t keep them in stock…
If I asked you what the best-selling product at Costco is, what would your answer be?
I’ll tell you the answer in a moment. (It’ll blow you away.)
For the few of you who may not know, Costco is a members-only big-box retail store. It’s a popular place to buy bulk items at discount prices.
That model has made Costco the third-largest retailer in the world… with a market cap of $240 billion.
Some of the most popular products it sells are toilet paper, rotisserie chicken, bacon, hot dogs, and gas.
In fact, during the COVID-19 pandemic, Costco couldn’t keep toilet paper on the shelves. Things got so bad, it had to actually put purchase limits on toilet paper.
So I wouldn’t be surprised if your answer to my question above is “toilet paper.”
But the correct answer is gold.
In September, Costco started offering one-ounce gold bars for about $2,000. According to the company’s chief financial officer, Richard Galanti, they’re selling like hotcakes.
“I’ve gotten a couple of calls that people have seen online that we’ve been selling 1-ounce gold bars. But when we load them on the site, they’re typically gone within a few hours, and we limit two per member,” Galanti said on the company’s quarterly call.
Friends, this is insane. The demand for gold bars is so strong, Costco can’t keep them in stock.
Today, I’ll tell you why I believe the company is running out of gold bars, and what it means for you…
Why Costco Is Running Out of Gold Bars
Inflation is crushing the American consumer. Since the pandemic in March 2020, we’ve seen the inflation rate peak as high as 9.1%.
It’s decelerated since then. But that just means prices continue to rise at a slower rate.
That’s why I believe people are buying gold bars like hotcakes… They’re trying to protect their purchasing power.
And who can blame them? Especially since I believe things about to get worse.
Just take a look at the chart below. It shows the amount of U.S. debt.
For the first time ever, our government is $33 trillion in the hole.
Friends, this is truly an unfathomable number.
Just to give you some context, one trillion one-dollar bills stacked on top of each other gets you about a third of the way to the moon.
Thirty-three trillion dollars is not “just a number.”
It’s the financial burden that you, your kids, your grandkids, and your kids’ grandkids will have to shoulder.
Now, from 2008–2021, this out-of-control debt wasn’t a big problem because interest rates were close to zero.
So the interest we paid on that massive debt pile wasn’t a big deal.
But interest rates are zero no more.
To combat inflation, the Federal Reserve has jacked up rates to 5%. JPMorgan Chase CEO Jamie Dimon believes they can go as high as 7%.
At 7%, the interest payments on $33 trillion would be in the vicinity of $2.1 trillion per year. That’s nearly three times bigger than the U.S. defense budget.
To cover these debts, the Fed will be forced to print money so it can go out and buy the government’s bonds. It will have to do this because there won’t be enough buyers in the market to cover the amount of new government bond issuance.
When the Fed cranks up the money printer, it’s diluting the value of all the other dollars in the system. Just like when a company issues too many shares, it dilutes the value of the shares you own.
The result? The value of the dollars you own will shrink – a lot.
This level of debt is the endgame I’ve been warning you about… a “doom loop” that tips America over the edge from dollar superpower into dollar collapse.
That’s why I believe so many people are stocking up on gold.
And Costco isn’t the only major player in the gold market. Not even close.
In the first quarter of 2023, central banks added 228 tons to global reserves. That’s the highest rate of purchases seen in a first quarter since the data series began in 2000.
It’s also a continuation of a surge in gold purchases over the past 12 months.
You can see that in the next chart…
Since January 2020, gold is up 32%.
That may not seem like a lot – especially when stocks like Nvidia are up 193% in one year – but that’s a huge move for the $12 trillion gold market.
Now, I recommended gold as early as 2015 as disaster insurance because I believe everyone should have some gold. And my readers are up 56% on that trade.
But the reality is most of the time, gold is an atrocious investment.
It pays no dividend. It has limited industrial uses. And it can go through long stretches of time where its price goes nowhere.
So that’s why I’m not recommending gold today.
There’s a Better Way Than Gold
Friends, everything about the economy right now comes back to one thing: inflation.
It’s on everyone’s mind. It enters every conversation.
It’s an economic problem. It’s a political problem. And it’s also a huge problem for your personal wealth.
It’s not a temporary rise due to supply chain issues (although that’s certainly keeping goods scarce)… or the demand for popular items like a PlayStation video game console.
We’re seeing the inflationary impact of trillions of dollars in fiscal stimulus created during the pandemic.
But things are about to get worse…
There’s an unprecedented government event scheduled for the month of November. And I believe it will trigger the final collapse of the dollar and its purchasing power for everyday Americans
That’s why on Wednesday, November 8, at 8 p.m. ET I’m holding an event called The Final Collapse.
During this special event, I’ll reveal the one asset I believe will skyrocket even as the value of the dollars in your wallet, bank account, and brokerage accounts collapses.
The last time the dollar had a similar crisis, my readers had a chance to make 27 times… 56 times… and even 850 times their money – in less than two years off this asset.
I’ll also give you a free recommendation, no strings attached.
You need to know, my past free picks have an average peak gain of over 1,100%. That would be 12 times your money.
Friends, it bears repeating: The last time the dollar had a similar crisis, my readers had a chance to make 27 times… 56 times… and even 850 times their money – in less than two years.
Inflation is already destroying the retirement plans of millions of Americans.
You cannot afford to ignore this. The stakes are too high. So please be sure to join me on Wednesday, November 8, at 8 p.m. ET.
Let the Game Come to You!
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Big T
One More Thing
Teeka is spot on about the debt problems and the threat to the dollar.
What’s more, if a recent paper from the Wharton Business School is right, the consequences will likely appear in your lifetime… or at least in your children’s lifetime.
As the paper notes:
“Under current policy, the United States has about 20 years for corrective action after which no amount of future tax increases or spending cuts could avoid the government defaulting on its debt whether explicitly or implicitly (i.e., debt monetization producing significant inflation). Unlike technical defaults where payments are merely delayed, this default would be much larger and would reverberate across the U.S. and world economies.”
Furthermore, the paper says the 20-year scenario is a “best case.” Meaning, the economy will likely see the full consequences before then.
If that doesn’t get you thinking about your investments and the value of the dollars you’ve saved, nothing will.
We can’t state this strongly enough. Teeka’s event next week is a must-see. We hope you’ll join him. Go here for details.
Unconnected Dots
Our main task at the Daily Cut is to try to “connect the dots.” That is, we help you figure out what events are about, what makes them important, what their consequences are, and what it all means for you.
But sometimes, we see the individual “dots,” but can’t yet figure out how they connect to anything. Maybe they never will connect to anything.
Regardless, if those unconnected dots feel as though they could be important, we’ll mention them here. And we’ll let you draw your own conclusions.
Today’s unconnected dots…
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To be honest, this is more of a “connected dot” than an unconnected dot. But we had to find a way to squeeze this in today’s issue.
Bloomberg reports:
“Pandemic stock darlings are facing a wall of credit pain as free debt they gorged on in the easy money era comes due for refinancing.
“Companies from Peloton Interactive Inc. to Just Eat Takeaway.com NV took advantage of investors’ hunger for stocks that boomed during lockdowns by issuing convertible bonds — which can be turned into equity — with no coupon at all. The mania was such that $58 billion of the securities were issued in 2021, an increase of almost 1,100% from two years earlier.
“The cheap debt now risks becoming a burden for growth stocks, many of which have fizzled since people began returning to offices and interest rates began to rise. Barring a spectacular rebound, the Covid boom stocks and other companies with zero coupon credit are facing a $69 billion mountain of repayments in the coming three years.”
There are always consequences for foolish behavior. We’re sure it did seem like a good idea at the time to issue that debt. But that’s not the foolish behavior. The foolishness was in not planning for higher interest rates in the future.
We guess “stock darlings” are about to learn their lesson.
More Markets
Today’s top gaining ETFs…
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U.S. Global GO Gold and Precious Miners ETF +4.9%
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iShares MSCI Chile ETF +4.7%
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VanEck Gold Miners ETF +4.3%
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Invesco S&P SmallCap Consumer Discretionary ETF +3.9%
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Invesco S&P Ultra Dividend Revenue ETF +3.3%
Today’s biggest losing ETFs…
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iShares U.S. Oil & Gas Exploration & Production ETF -1.1%
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First Trust Nasdaq Oil & Gas ETF -1%
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Energy Select Sector SPDR Fund -1%
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Fidelity MSCI Energy Index ETF -0.9%
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iShares U.S. Energy ETF -0.9%
Mailbag
If you have any questions or comments for our experts here at Legacy Research, we’d love to hear from you.
Write to us at [email protected] and just type “Daily Cut mailbag” in the subject line.
Cheers,
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Kris Sayce
Editor, The Daily Cut