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The government’s robbing you (and how to fight back)

Dear Retail Investor,

What if you could magically increase your bank account by 2,000%?

That would sure make it easier to pay off your bills!

Of course, there’s no way you can create money like that at the snap of a finger.

But the government can.

To wit –  Washington’s juiced the overall supply of money in circulation from $1.5 trillion to $20.66 trillion since 1980.

That’s nearly 2,000% higher!

 source of image: fred.stlouisfed.org

How did the government pull this off?

Through what’s euphemistically known as quantitative easing (QE).

In other words it had the Fed “print” money.

What the government did in this case was get the Federal Reserve to buy bonds and Treasuries with money it doesn’t have.

The idea was that it would juice the economy.

It was the fourth time the American government has resorted to QE since the 2008 financial crisis.

Did all that extra money help the economy?

Hard to tell.

But what it has done is fuel inflation.

In the last 12 months, inflation in the U.S. has gone up 5.25%

That’s over 4 times the 1.23% inflation rate of 2020.

And it’s likely to get much worse.

Allow me to show you why.

Let’s say a country’s economy produces $1 billion in goods, and each one of those goods costs $10.

That makes for a total of 100 million units (100 million x $10 = $1 billion).

Now let’s further suppose that country doubles its money supply, but there’s no change in economic output.

There would still only be 100 million units of goods, but twice as much money chasing them.

The eventual (but inevitable) result – a doubling in price to $20 for each unit.

You would now have an economy worth $2 billion…

… but the number of goods (and real usable value in the economy) would be exactly the same.

Bottom line: Twice as many dollars in an economy makes those dollars worth half as much…

… unless there’s a corresponding rise in economic output.

Of course, America’s economy is complex, so the above example is simplistic.

But the point is still valid –economic output in the U.S. has not offset money creation.

Therefore we’ve been getting inflation.

How bad has inflation been?

It now takes $3.14 to buy what a dollar could buy in 1980.

That’s a loss of 68.1% in purchasing power.

Ouch.

But inflation is likely to get much worse in the coming months and years.

That’s because…

The government wants – no, needs – higher inflation

The government’s grand plan is to use huge infusions of new dollars to pare down debt, juice the economy and fund government obligations.

Of course, it could simply increase taxes and slash spending.

But that ain’t gonna happen.

That would be political suicide.

People tend to get angry when taxes shrink their take-home pay.

And what about people who’d suffer cutbacks in their entitlements?

I shudder to think how they’d react.

Just look at what happened in Greece 12 years ago when the government implemented austerity programs to help pay down their debt.

That action triggered riots, looting, and arson.

No way U.S. politicians will risk that.

So they’re taking what they see as the easy way out.

Unfortunately…

Rampant inflation risks destroying the assets of millions of Americans

The outrageous truth is that the government is robbing everyday Americans through its inflationary policies.

Up until now, that’s happened slowly.

But with government borrowing increasing at breakneck speed, there’s a chance inflation will spiral out of control.

If that happens, your wealth could take a huge hit.

Unless you’re prepared.

And if you are, you could not only protect your wealth…

You could get rich.

The best way to protect and grow your wealth from inflation

I’m talking about gold and silver.

People have been using gold and silver to protect their wealth for thousands of years.

The reason? They retain purchasing power during high inflation.

You should definitely possess some physical gold and silver for wealth protection.

But owning the metals won’t do much for growing your wealth.

That’s where gold and silver miners come in.

The reason – gold and silver miners historically outperform precious metals.

For example, from 2015 through January 2021, gold miners gained 182%… while gold itself only gained 78%.

That’s more than double.

And from 2001 to 2007, miners outgained gold by 5 to 1.

What you need to know before you buy a single precious metals stock

You have to perform some serious due diligence on any miner you’re considering investing in (as you should for any stock).

For example, how sound is company management?

How successful has it been in turning promising properties into producing mines?

And do their companies have the money to pursue development plans?

This kind of research can be tricky to perform and take a lot of time.

But it’s definitely worth it.

Because if you hit a winning miner at the beginning of a bull precious metals market, you can literally make a fortune.

This is especially true with junior miners.

Many of these companies are just a few dollars a share or less.

And their prices can explode 10-fold – or more – on just a whiff of good news.

I know, I know…

Gold and silver have been in the toilet for much of this year.

Who the hell wants anything to do with them?

Well, to quote a famous aristocrat, to make real money in the market you have to buy when there’s blood in the streets.

The streets of precious metals miners are definitely bloody these days.

I believe that will change thanks to our escalating inflation rate.

When it does, we may well see a precious metals bull market that could rival any that the world’s ever seen.

And if you’re in on the right mining companies when that happens, you could explode your net worth.

 You could also consider investing in what’s known as precious metals streaming companies.

These companies don’t mine.

Instead, they own stakes in mining outfits.

These stakes require miners to pay royalties to their streaming companies on every ounce of gold or silver produced.

Royalty companies can be wildly profitable.

Take Royal Gold (Nasdaq: RGLD).

Back in 1991, the company had a market cap of $7 million (when adjusted for splits).

Today?

Try $7 billion.

If you had gotten in on that company early in the game, you could have made a fortune.

That shows the home run potential of investing in an early-stage precious metals streaming company.

We’ve just put together a report on an early-stage gold streaming company that has outstanding potential.

It’s definitely worth a look if you want to consider putting money into the precious metals market.

 You can check it out here.

That’s it for now.

Until next time…

Doug Fogel
Contributing Editor, Dear Retail

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