Consequences, Crashes And Coronavirus

Boeing Stock: High close in March 2019 was $430. Close on April 21, 2020, was $136, down 68% from its high. Borrowing to buy back stock to boost share prices and management compensation worked for Boeing stock prices until it didn’t. Now Boeing has an impaired balance sheet, too much debt, not enough revenue and wants a $60 billion bailout. The piper must be paid, one way or another, by someone.

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The daily S&P 500 Index looks similar.

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The 25-year chart of monthly S&P 500 Index shows that prices have broken important uptrend support lines, as they did in 2000 and 2008. President Trump needs a strong market this summer to boost his reelection chances. Expect more debt, bailouts, panic and posturing. We’ll see if the Fed can generate a pre-election rally.

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Gold is the ultimate currency. Silver is an industrial metal and a less important currency. In a panic (March – April 2020) traders sell everything to meet margin calls. Some gravitate, if they can, toward the ultimate currency—gold.

From Alasdair Macleod: “Payments Panic and the Ending of Fiat Currencies

“But with the Fed and the US government promising to underwrite all businesses facing difficulties as a consequence of the virus, the inflationary consequences for the dollar will be staggering.”

“… it is almost certain the dollar’s value in terms of purchasing power will be fatally compromised.”

Because of Repo Madness, QE, Fed policies, and bailouts, the following are almost certain:

  1. Gold will rally well beyond its all-time high of $1,923.
  2. Silver will rise past highs of $50.00 from 1980 and $48 in 2011.
  3. National debt will grow many $trillions larger.
  4. Government expenses will expand, while tax revenues decline.
  5. The Fed will “print” – monetize government debt – and increase QE to fund excessive government expenditures.
  6. COVID-19 may become unimportant in several years, but massive unpayable debt will remain.
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