Every time I turn on the TV, I am reminded that we are in another election season. As a matter of fact, it seems that those “in charge” want to keep us occupied 24/7 with the idea that if we vote this way or that way, we will be better off. As we approach November, I am sure we will see a nauseating amount of propaganda from both sides.

There are a few common themes that I am seeing in the commercials.

One side wants to raise taxes on the “rich” and make corporations pay more taxes. For those who are unaware the corporations, if taxes are raised, HAVE to pass that cost on to you and me. For the doors to stay open and to keep a profit margin that allows an actual PROFIT, taxes must be accounted for. The result? YOU PAY MORE for whatever you are buying. INFLATION.

I also see ads that bash corporations for price-gouging and shrinkflation. Both may be somewhat true but what can government do about it? Some are proposing price controls which have been shown to destroy supply chains and lead to shortages or unavailability of the goods being artificially priced. If it costs more to produce than it can be sold for, production STOPS. This would lead to EMPTY STORE SHELVES and likely a black market where a fair (likely FAR higher) price can be determined.

By the way, what has government done that has actually worked?

They got involved in education and our education system is as bad as I have ever seen it. They got involved in college funding and now only the rich can afford a college education without going deeply into debt. They got involved in the housing market and now homes are less affordable than at any time in our history. They got involved in medicine and the greatest medical system in the world has been destroyed. Get sick and wait 6 months to see a specialist. Have surgery without great health insurance and you could lose your home. I will pass on having them getting even more involved.

Another side wants to increase tariffs and it appears they want to start a new trade war. Who pays? The foreign companies sending goods? NO. WE PAY in higher prices for anything that is being artificially inflated with tariffs. INFLATION.

Both sides are calling for lower interest rates and a weaker dollar- which actually go hand in hand anyway. While this MAY help our multinational companies sell goods overseas- or it may not because tariffs are a 2-way street the ultimate result is that, as our dollar loses even more of its purchasing power, we will be paying FAR more for most goods. Again, INFLATION.

My take on this is that many are looking backwards. What worked in the past is HIGHLY unlikely to work today. If they lower interest rates (they already are but have not admitted it yet) we will get a weaker dollar. No different than say 2008. The difference then was that the world still trusted the United States rule of law, our liquid markets and relative stability.

Fast forward to today. The liquidity problem that plagued us in 2008 is similar to what we see today but the CURE- lower interest rates and weaker dollar to prop up asset markets just may be today’s DISEASE.

If the Fed continues to pummel rates lower, I look for inflation to rocket higher. It is not only that they are “printing” us into a slow dollar death but also that the rest of the world is now shunning our debt and currency as best they can.

As asset markets tanked in 2008 there was a mad rush-globally- for the PERCEIVED safety of US Treasuries and the US dollar. Tis gave us a LONG runway to be able to “print” at will because the demand for our “product”- DEBT was robust.

This leads many to believe that as asset markets dive again (who knows when) the “safe havens” will be the same.

I do NOT share that belief.

In the next downturn I do NOT expect that the rest of the world will be piling into treasuries and dollars. As a matter of fact, they are SELLING today rather than buying. It is clear to me that the FAITH in the US is clearly waning.

I believe they see that our political system is no better than any banana republic. They see our rule of law is nowhere near what it used to be, and they also see a rudderless ship that is creating havoc around the globe. They also see us using our currency as a weapon. Would you be flocking to that type of “safety”?

It is far more likely that when the SHTF next time- whether it be political, financial, or just about anything else the go-to assets will be HARD ASSETS and leading the way- GOLD. I believe this is why the central banks, megabanks, billionaires, and countries are all buying gold in anticipation of an upcoming upheaval of some kind.

I believe that gold is the go-to globally in the next downturn. I also believe that SILVER is going to be highly sought after- particularly when gold becomes too expensive for us regular people to afford.

Having said that, food, energy, water, and other necessities that cannot be “printed up” will be in high demand and will likely command FAR higher prices.

If you do not have a plan for FAR higher inflation, I suggest you get one – and quickly!

Be Prepared!

Any opinions are those of Mike Savage and not necessarily of those of RJFS or Raymond James. Expressions of opinion are as of this date and are subject to change without notice. The information in this report does not purport to be a complete description of securities, markets or developments referred to in this material. The information has been obtained from sources deemed to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct.

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