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Markets and Currencies – a quick update from 30,000 feet.

You might be surprised to learn that climate change, the global economy, and the world’s currencies all have much in common. Yes folks, that is the world we live in where similarities become common place amongst all the phony distractions created to keep us occupied.

Let us start with the climate scam. Far be it from me to go into detail on the changing weather patterns but even a grade six school student could tell you that co2 is essential to the planet as it gives life to trees and other vegetation and that data being used to tell us that the world is warming up is based on a very short time frame. You’d have to be heavily influenced by money and greed such as the Al Gore’s of the world or extremely naïve to not look at the centuries of data to understand that we go through cycles. Even if co2 was causing an end of world scenario, a tax on Canadians and few other western nations is not going to change the climate, especially when close to 5.5 billion people that are the world’s largest contributors to co2 emissions pay little to zero tax on co2.

That 5.5 billion of the roughly 8 billion people on this planet are from Latin America, China, India, Africa, the Middle East, Russia, and Mexico. This also happens to be the same group, minus a few countries that are forming new trading alliances and scrapping the use of the US Dollar for international trade. The US Dollar has been the world’s reserve currency for 80 years and that influence has been a major factor in the USA becoming the world’s most dominant economic power. But that advantage is slowly coming to an end as these nations are using their own currencies and, other major forms of money, such as gold or the gold backed Chinese yuan for trade.

This loose coalition has grown out of the base of the BRICS nations which stands for Brazil, Russian, India, China and South Africa. The BRICS nations were formed in 2001 and have moved stealthily and steady towards creating economic freedom from the west (USA, Canada, western Europe, the UK, Australia, New Zealand and to some extent, Japan) that have frankly bullied the rest of the world and called the shots for last few centuries. The BRICS have established their own World Bank called The New Development Bank to circumvent the “establishments” models, the International Monetary Fund and the World Bank.

This August the BRICS meet in Johannesburg, SA and many suspect the meeting could be epic and have immediate and ever lasting effect on how the world economic framework operates. And believe it or not they can do so without imposing a carbon tax. Haha. I should say, without the financial strangulation of a tax that does nothing but steal from the poor and transfer to the wealthy which destroys the economic power of the middle class.

Changes that are likely at the meeting are the acceptance of other countries into the core group of five. So far, nineteen countries have applied for membership including Saudi Arabia. And more are rumoured to be interested such as Argentina, Egypt, Mexico and even Japan and Germany. (Interesting side note on Germany is that when the Berlin Wall came down Germany had a choice of aligning with Russia or the West. It was then that President George Bush Sr. made a promise to Germany and Russian President Mikhail Gorbachev that NATO would leave Russia alone and not encroach on it borders, thus ending the cold war. This also explains more about the Ukraine War How NATO's expansion helped drive Putin to invade Ukraine : NPR)

So no, not all of the 5.5 billion are applying for BRICS membership but they all will be affected if this is the time that the BRICS choose to unveil their long-promised commodity backed currency to challenge and replace the US dollar. Commodities backing this currency would almost certainly include gold and likely oil and maybe a few more, but nothing has been confirmed.

If the BRICS currency starts to dominate trade in the regions mentioned, that make up over half the world’s population, the US dollar and other debt laden fiat currencies of the west are sure to suffer. It might not crush the US dollar overnight, but it will cause chaos.

This is a war, a currency war between east and west and the east holds all the cards. The inevitable end to the US world dominance will happen at some point. You cannot have the debt load that they and all their western allies carry and control, your own destiny. When this happens, we expect that commodities, especially Gold and Silver, will go up. If you combine the economic downturn of the west along with their currencies being worth less and less with new currencies coming on board you will understand why for the past 3 years, the Central Banks of the world have been buying and stockpiling record amounts of gold. Some people like Andy Schectman believe that we will hit a point where the Comex markets temporarily shut down due to lack of supply to buy and sell and/or price volatility that is too volatile.

And what effect will that have on the stock markets that are currently trading in over-priced ranges not seen since 2007. And they are being led by just a few stocks. In the USA, 7 stocks, Amazon, Apple, Microsoft, Google, Facebook (Meta), Nvidia and Tesla are trading through the roof while the other 500 companies in the S&P500 trade at roughly half of the valuation of the Big 7. The same in Europe where the Big 7 include L’Oreal, Christian Dior, Ferrari, LVMH, Hermes, Richemony and Kering are trading even more ridiculously high at 3 times the average cost of the other 600 stocks on the European index Stoxx 600. This run we have been witnessing is not dissimilar to the tech bubble of 2001.

But what about the banks? I thought there was a banking crisis in the USA? Well, while we are watching this and listening to the rhetoric over increasing the debt ceiling and the proxy in the Ukraine, the banking problem isn’t being talked about. But that doesn’t mean we won’t hear of it again. Problems exist and are temporarily in hibernation until the bear wakes from his slumber. Wall Street might look good right now, but Main Street is hemorrhaging under high inflation and a 500% increase in interest rates which are pushing borrowers to the brink.

To conclude we have a few stocks driving this market run, a few countries pretending they are saving the world by taxing their citizens and a few very powerful countries lining up to economically destroy the western economies that are trying to save the world through egregious taxation. All of this leads us to an inevitable ending. But I stop short of knowing when that will be. Just be prepared.

A 3 minute 30 second video suggesting that a recession worse than 1929 is soon to be upon us.

Remember we use Rules Based Investing (RBI), a method of money management that few advisors use. RBI keeps you into the good sectors when the markets are safe and in cash, bonds or treasury bills when the markets are not safe.

Yours in Faith, Family and Finance,

Daryl Cooper


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