Black Coffee: Surf & Turf

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’ve got another busy weekend ahead of me, so let’s get right to this week’s commentary …

Some people want champagne and caviar when they should be having beer and hot dogs.

– Dwight D. Eisenhower

Credits and Debits

Debit: Did you see this? If you’re still thinking about whether or not to travel abroad for this year’s summer vacation, keep in mind that United Airlines says surging jet fuel costs – which have doubled over the past four weeks – are forcing them to raise ticket prices by as much as 20%. If there is a silver lining to that news, it’s that United admits that those higher prices will almost certainly result in planes that aren’t flying at full capacity. By the way, it isn’t just jet fuel prices that are soaring. So is gasoline. Lobster prices are too – and for good reason …

Debit: Meanwhile, a new study has found that half of all Americans age 25 or older with investable assets of at least $150,000 say they “immediately” check their retirement accounts on each day that ends with a market decline. Talk about pointless self-inflicted punishment. Even more disturbing, 67% admit that they’re more worried about running out of money than dying, with Gen X most likely to fear being in the red over being six feet under. In fact, 73% of Gen Xers said they worry more about going broke than death, followed by millennials (69%) and boomers (59%). They might have a point …

Credit: Fortunately, the world’s richest man, Elon Musk, insists that people shouldn’t stress over building a nest egg for the distant future because saving for retirement is now pointless because of the impending “supersonic tsunami” of artificial intelligence (AI) and robotics, which will bring about a world of zero scarcity within the next 15 years or so. So there’s that. Then again, maybe Elon should try selling that here …

Debit: One thing is certain: The US Government seems to agree with Mr. Musk. It’s the only logical explanation as to why the federal government is now half-way through its fiscal year with a deficit of $1.2 trillion. If there is any silver lining here, it’s that the deficit was $100 million higher at the same point of the fiscal cycle last year. Unfortunately, another thing that hasn’t changed is the ever-increasing supply of US dollars (USDs) in circulation – otherwise known as the “money” supply (M2).

Debit: Since the global M2 money supply of US dollars (USD) bottomed in November 2022, it has surged by nearly $24 trillion, or 25%. Of course, stopping the dangerously-rapid increase in M2 would be the right thing to do, but that would obliterate the markets — which is precisely why the Fed won’t do the right thing. So enjoy watching them continue to do the only thing they’re truly good at: printing currency (otherwise known as “more cowbell”) …

Credit: Speaking of the money supply, macro analyst Michael Oliver correctly points out that M2 is “the ever-expanding yardstick that people use to measure their incomes, investments, and future decisions, (but) it’s a drugged metric.” Indeed it is. He goes on to say that since 1980, M2 has grown fifteen-fold. As a result, the average price of a loaf of bread has nearly tripled, while US home, copper, and gold prices have all seen sixfold gains. Even so, the silver price has barely doubled. Asks Mr. Oliver: “Is it ridiculous for silver to also seek to catch up in some dramatic manner to that underlying price reality?” Psst… that’s a rhetorical question, folks. Unlike this one:

Credit: Perhaps not coincidentally, last week Henry Paulson was calling for a ‘break the glass plan‘ that would be used in the event that the world’s US Treasuries (UST) dumping gets out of hand, leading to a debilitating spike in global interest rates. Some economists believe the need for such a plan is more important than ever as the risk of an impairment in the petrodollar trade due to a growing number of nations using currencies other than the USD – such as the Chinese yuan – for settlement of oil purchases. Time will tell – although it’s never a bad idea to have a back-up plan. Or is it?

Credit: Needless to say, Sprott macro analyst Paul Wong points out that, “Policymakers face a difficult choice: bear the risk of a malfunctioning bond market amid record debt and deficits, or inject liquidity into an inflationary shock, risking even higher inflation. Historically, the second option prevails. Once balance sheets expand into supply scarcity, gold shifts from an asset to a reference point – a neutral reserve collateral.” Mr. Wong also warns that any repricing of the yellow metal can be rapid because settlement demand from the energy markets is capable of overwhelming the relatively smaller physical gold market.

Credit: Macro analyst David Jensen: “The systematic deconstruction of our societies that we’ve seen over the past several decades is now greatly accelerating. Accumulated societal wealth and systems built over centuries that sustain a high quality of life are being wrecked.” On the other hand, change is constant and it usually happens for good reason. Behold, Exhibit A:

Credit: The good news is that nobody has to sit and watch helplessly as global confidence in the USD collapses and their long term savings continues to lose purchasing power at a rapid rate. Got gold?

By the Numbers

Here’s a look at the 10 most-recalled cars, based on the total number of maintenance notices issued between 2020 and 2025:

9 Toyota Camry

10 Nissan Altima

17 Honda CR-V

17 Toyota RAV4

18 Toyota Sienna

39 BMW X5

40 Mercedes C-Class

42 Ford Ranger

71 Porsche Taycan

94 Ford F-150

Source: Brown & Crouppen

Last Week’s Poll Results

• Very prepared  62%
• Somewhat prepared   32%
• Not prepared at all   6%

More than 2300 Len Penzo dot Com readers responded to last week’s question and it turns out that slightly more than 1 in 3 of you are either bit uncomfortable or completely unprepared with your retirement planning status to date.

If you have a question you’d like me to ask the readers here, send it to me at Len@LenPenzo.com and be sure to put “Question of the Week” in the subject line.

The Question of the Week

Useless News: The Bounty Hunters

Two cowboys came into a town that was having nothing but problems with Indian attacks. They saw a sign that offered to pay one ounce of silver for every scalp collected.

They double checked with the sheriff and, sure enough, it was true! They packed up their gear and headed out into Indian territory.

Later that night they set up camp and fell asleep under the stars and dreamt of all the silver coins they were going to collect.

The following morning the first cowboy woke up, looked to the east, and saw nothing but Indians.

Then he looked north, west, and south and saw… the same thing.

Realizing they were surrounded by thousands of Indians, the first cowboy poked his partner in the ribs and said, “Hey, Cody. Wake up! It’s our lucky day!”

(h/t: GoldHermit)

Squirrel Cam

It’s a squirrel parade!

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More Useless News

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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 out to me at: Len@LenPenzo.com

From Saul:

Why are you always so negative?

I don’t know. Heck, even my blood type is negative… so let’s blame that.

If you enjoyed this edition of Black Coffee and found it to be informative, please forward it to your friends and family. Thank you! 😀

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Photo Credit: public domain