It’s time to sit back, relax and enjoy a little joe …
Welcome to another rousing edition of Black Coffee, your off-beat weekly round-up of what’s been going on in the world of money and personal finance.
I hope everybody had a wonderful week. And with that, let’s get right to this week’s commentary, shall we?
It is what it is, but it’s not what it seems.
— Paul Hewson
Damn the torpedoes; full speed ahead!
— David Farragut
Credits and Debits
Debit: Did you see this? After a long run, the share of borrowers with a 30-day past-due missed payment against their credit accounts is rising again. Indeed, credit scores have been steadily improving over the past ten years, but increases in missed borrower payments and rising consumer debt levels are finally starting to take a toll. As a result, the national average credit score just fell for the first time since 2014; according to a new report from FICO, the average American’s credit score is now 717 – which is considered good, but 23 points below the excellent threshold that guarantees the best loan rates. Then again, I guess everything is relative …
Debit: Now for some American history: The 1973 Arab oil embargo not only shook the global energy market, but it also reordered the global economy with the resulting weaponization of energy. After a persistent bout of inflation topped out at 6% in 1970, inflation as measured by CPI fell back to slightly under 4% by the first quarter of 1973. That period from the late 1960s through the early 1970s is much like today; in both cases, politicians and central bankers celebrated the decline in the CPI. However, in late 1974 the CPI exploded to 12%. So … is a larger follow-on inflation surge in the cards this time around? We don’t have a good answer at the moment … er, unlike this guy:
Credit: As macro analyst Larry MacDonald opined this week, “We hear the comparisons (and) they’re growing louder by the week (that) 2023-2024 looks a lot like 1973-1974. The key difference this time is that oil prices are currently subdued, thereby keeping that second inflationary conflagration at bay. For now. However, that may be changing. In the meantime, the currency printing continues. As for the excess cash that isn’t being used to drive up prices on basic living expenses, well … if we haven’t made it clear enough by now, a lot of it is finding its way here:
(h/t: @LibertyPillMeme)
Debit: Speaking of inflation, according to the US Bureau of Labor Statistics, auto insurance has risen more than 20% from a year ago – that’s the largest jump since 1985. You know what that means … auto insurance has actually risen at least 50% over the past year. As one customer observed, “If it weren’t for insurance, I could afford most of the things I am insured against.” Meanwhile, back at the dealership …
Credit: There’s no doubt that inflation is negatively impacting America’s middle class. In fact, a new report by Bloomberg reinforces the conventional wisdom that many middle class Americans are using debt just to maintain their standard of living. One 40-year old Denver resident who is carrying a monthly mortgage of $1650 – and $4000 in credit card debt – complained that, “I’m making the most money I’ve ever made, and yet I’m still living paycheck to paycheck. There’s this wild disconnect between what people are experiencing and what economists are (reporting).” You can say that again …
Credit: Ironically, despite the high-flying property and stock markets, people like Mark Zuckerberg and Sam Altman are getting into defensive positions. According to Jonathan Rose, CEO of Genesis Gold Group, a trend has been taking shape over the past year: he says the wealthy – everyone from Zuckerberg and Altman to tech moguls and even pro athletes – are increasingly purchasing gold to protect their financial futures from a potential sharp devaluation of the US dollar (USD) – as if it hasn’t been devalued enough since the pandemic. Then again, there’s the wealthy – and then there’s “the wealthy”:
(h/t: thefunpost.com)
Credit: So … what do these upper-class individuals know that others don’t? Well … we think sagacious financial commentator Franklin Sanders hit upon the answer this week. He observed that, until recently, whenever the 10-year Treasury yield climbed, “gold trembled – but no more. (On Monday) it rose 0.94% to 4.34% but gold never shuddered. Y’all watch this going forward. Y’all will see many more days where gold ignores this boogeyman and rises anyway, because a large component driving investors into gold is the USD’s present, predicted, and predictable deterioration.” Not to mention the fact that you can’t print physical gold – despite Wall Street’s best efforts …
This photo has absolutely NOTHING to do with the subject at hand; we’re just testing your power of observation. (h/t: thefunpost.com)
Debit: Unfortunately, the mainstream media loves to make a habit of mocking those who wish to hold a little physical gold as “doomsday preppers.” In one example, a recent article by CNBC predictably mocked the public’s growing interest in the yellow metal as being dominated by “doomsday preppers” and, heh, “climate change deniers” who are “deeply disturbed by the complexity and ambiguity of modern life.” Actually, most people purchase physical gold because they’re deeply disturbed by the financial damage caused by ever-creeping socialism – and the jaw-dropping economic ignorance of politicians and their media lackeys.
Debit: By the way, to illustrate the incompetence of most mainstream media publications and other so-called “financial experts” really are, the article notes that, “William Bernstein, author of The Four Pillars of Investing, mostly dismissed the metal as a serious investment, pointing out that it has risen around 1% a year, on average, over the past century.” Let’s see … William – and the CNBC editors, for that matter – should check their math, because a move from $20 to $2100 over a 100-year span is definitely not an average increase of 1% per year.
(h/t: SD Bullion)
Credit: On a related note, macro analyst Bill Holter warned those who make a habit of disparaging precious metals advocates to “just look at the world around you. This (monetary system) is clearly unraveling – and if you can’t see that, then I can’t help you.” We get it, Bill. Perhaps a little pop culture would make things a little bit clearer:
Debit: By the way, for those who still can’t see it, we’ll try spelling it out in historical terms. Here’s the deal: The current debt-based monetary system powered by fiat currencies is openly entering its final chapter; one marked by rapidly increasing debt and swiftly declining purchasing power and credibility. Of course, this steady downward spiral of fiat currency purchasing power and follow-on wealth destruction is nothing new. Without exception, all fiat currencies eventually return to their intrinsic value of zero.
Credit: The first paper currency was issued more than by ancient China in the 7th century A.D. and it eventually failed spectacularly after bankers were caught issuing far more notes than the precious metals they had claimed to have backing them. Today’s global fiat currencies are empirically following the same familiar pattern. Only this time it’s in a global setting of unprecedented debt which amounts to well over $300 trillion – and growing. Thankfully, there’s still time to protect your nest egg with a little wealth insurance in the form of physical gold. Get it while you can – because once confidence fails and the panic starts, it will be too late.
By the Numbers
Taxpayers and tax professionals are getting their returns into the Internal Revenue Service (IRS) earlier this year. With less than a month to go before the tax deadline for personal filers, here is the latest IRS data regarding the status of 2024 US tax returns:
62,761,000 Total returns received so far.
97 The percentage of 2024 returns that have been filed electronically.
29,664,000 Number of returns completed by tax professionals.
47 The percentage of returns completed by tax professionals.
376,622,000 Visits to the IRS website in 2024 through March 8th.
18 Increase in number of web visits to the IRS over the same period last year.
-12.5 Percentage change in the number of returns receiving refunds between last year and this year.
$3145 The average refund amount in 2024.
$2972 The average refund last year.
Source: Accounting Today
The Question of the Week
[poll id="529"]
Last Week’s Poll Results
Which would you rather find?
- $10 million (59%)
- True love (41%)
More than 1900 Len Penzo dot Com readers responded to last week’s question and almost 3 in 5 say they would rather find a bag with $10 million in it than true love. I have been occasionally asking this question since 2018. For what it’s worth, here are the percentage of respondents who chose the $10 million during the previous three times this question was asked:
2022: 57%
2021: 51%
2018: 43%
If you have a question you’d like to see featured here, please send it to me at Len@LenPenzo.com and be sure to put “Question of the Week” in the subject line.
Useless News: Sobriety Test
A man got pulled over by a cop because he was weaving in and out of the lanes. The cop got out of his car and asked the driver to blow in a breath-analyzer tube to check his alcohol level. ”Oh, no,” the driver said. ”I can’t do that. If I do that, I’ll have an asthma attack and die.”
”OK,” said the officer, ”let’s go down to the station and you can pee in a cup to check your alcohol level.”
”Oh, no, I can’t do that,” said the driver. “I’m a diabetic and if I pee my blood sugar will go down so low that I might die.”
”Fine then,” the cop replied, “let’s go to the station and take a blood test to check your alcohol level.”
”Oh, no, I can’t do that,” countered the driver. “I’m a hemophiliac and I’ll never stop bleeding if you draw my blood.”
”All right then,” said the officer. “Then just step outside your car and walk this white line for me.”
Again, the driver declined. ”Oh, no, I can’t do that,” he said.
”Why not?” asked the cop.
The driver replied, ”Because I’m drunk.”
(h/t: Susan)
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More Useless News
Here are the top five articles viewed by my 48,231 RSS feed, weekly email subscribers, and other followers over the past 30 days (excluding Black Coffee posts):
- 31 Fascinating Facts You Didn’t Know About Gold
- How to Save Money by Living Like You’re Broke
- Is There a Perfect Portfolio Allocation?
- 5 Ways to Eat Healthy on a Budget
- 12 Ways to Prepare Your Kid for the Real World
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(The Best of) Letters, I Get Letters
Every week I feature the most interesting question or comment — assuming I get one, that is. And folks who are lucky enough to have the only question in the mailbag get their letter highlighted here whether it’s interesting or not! You can reach me at: Len@LenPenzo.com
After reading a Len Penzo dot Com article highlighting the benefits of maintaining your vehicle, Jenna left this note:
My brother is having a lot of trouble with his VW bus. It would be really nice if he could get a professional to help him.
Well, I’m not a mechanic, Jenna, but that’s alright … My boss throws me under the bus so frequently he must think I’m a mechanic too.
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Photo Credit: public domain
Another good cuppa Joe, Len. I think you need to repost your thoughts on how much gold/silver folks should own, and also how to use it when the currency finally falls apart! Bound to be more folks looking for answers going forward.
Meanwhile, I’m debating rolling ALL our savings into PMs and cocoa!
Thanks, Lauren! Just went to the grocery store to cover the next two weeks; I can attest the currency is definitely falling apart, as it buys nowhere near what it did even a few years ago – and I didn’t buy any cocoa. 😉
Hi Len,
I’ll second Lauren’s kudos. Thanks for the tasty cuppa!
I saw an article this week that showed the last three times cocoa prices went ballistic, silver ALWAYS made a similar move within 18 months. Fingers crossed! (Yes, I know silver/gold is for long term savings, not quick gains!) 🙂
Have a great weekend everybody!
Sara
Thanks, Sara!
OK, I admit I took the short yellow bus to school. What’s with the photo of the guy kissing the girl?
Never mind. I figured it out.
It took me more than a few seconds to see it too, Cowpoke. The woman says she had that photo on her refrigerator for several years before she noticed it.
I agree that inflation is still a BIG problem. I thought I’d share a tip that I use to help keep my grocery bill as low as I can. Here’s what I do. I keep a list in my phone and use it to price check the items on the store’s website before I go. That way I know exactly how much I’m going to spend. It works for me anyway. I also make sure that I save my list because it doesn’t change a lot from month to month. Then I use it to see how the prices have changed.
Thanks for the tip. But to be honest this reinforced something that I was planning to do but have never got around to. Am going to start next time I go shopping.
Nice tip. Thanks Nicole!
Len have u ever written an article on how u think gold and silver would be spent in a total collapse of the $ scenario. If not could u give us some of ur thoughts on this?
Joe, in a total collapse, it is my belief that silver would be the primary means of exchange, as gold would be too expensive to use for small purchases. In the US, holders of pre-1965 (“junk”) silver dimes, quarters, half-dollars and dollars would quickly recirculate among all Americans who are actively participating in the economy (i.e., those who are providing goods and/or services to the public). By the way, that’s why I believe it is important for anyone who is NOT working (for whatever reason) to hold a stash of junk silver coins to tide them over until any new currency comes on line.
Thankfully, there are benchmarks that have been around for thousands of years to facilitate commerce with both silver and gold. For example, silver dimes will always buy a loaf of bread, a pound of beef, or a dozen eggs. Silver quarters will always buy a gallon of gasoline, etc. (More on that here.)
Finally, if there is a total collapse, I am certain that a new gold-based currency would be released within a very short time-frame (probably within weeks) if only because the government would have no choice, as the public’s use of so-called junk silver would force their hand. Of course, to restore public confidence, the new currency will have to include gold specie (circulating gold coins) – otherwise, any new currency would likely fail within a relatively short period of time. That being said, I think it is far more likely that the government is smart enough to realize that they are better off sharply devaluing the USD relative to gold in order to preempt any total – and chaotic – collapse of the USD (which would also require the introduction of a new currency altogether).