Prepper Recon

First and foremost, stay calm. Panic can cause you to make decisions that you’ll regret later. On the flip side of that comment, complacency is probably more dangerous than even panic.

In this environment, fear is a natural, normal, and even healthy response. However, as Christian’s we’re not supposed to live in fear.

That might be a good verse to put on the refrigerator or staple to your forehead depending on the level of anxiety you’re dealing with during this crisis.

Before Wuhan, China had their first case of coronavirus, the US was running a trillion-dollar deficit and the Fed was pumping nearly half a trillion into repurchase markets to keep the banks functioning. Those are not normal behaviors during times of economic prosperity.

Since the crisis, the Fed has cut rates to zero and pledged another $1.5 trillion for buying treasuries and providing liquidity to ensure market stability. This has all been done in a matter of days.

I’ll remind you, the entire TARP bailout package for the 2009 crisis was only $700 billion. The powers that be, the president, Fed chair, and treasury secretary are not sleeping well right now. They know that we are on the precipice of a complete economic meltdown.

Even with these unprecedented measures, the market is setting record after record for single day point declines. The Dow crashes 2000 points one day then bounces back 1000 points on the following session. These wild gyrations are adding to the instability and threatening to crack the entire system.

The Wall Street journal published an article calling for the government to issues stimulus payments to every American. $1000 for each adult and $500 for each child. I expect we’ll end up getting something like this before it’s all said and done.

Print, print, print, print, print, print. Then, print some more. This may not be the end of the world as we know it, but it will certainly be the end of the dollar as we know it.

So how do we hedge ourselves for the coming cataclysm? Ironically, I think you need to build your cash reserves. Cut unnecessary spending anywhere you can. If you have a government job, I recommend building a 3-to-6 month emergency fund. For everyone else, you should consider a 6-to-12 month emergency fund.

Air lines, theme parks, cruise ships, theaters, restaurants, bars, and tons of other industries are going through a financial hurricane right now and the people they employ are going to have a really rough time. This is going to have a domino effect on the entire economy.

One of the effects we’re already seeing is the massive loss of wealth to retirement accounts and pension funds. Both government and private pensions were severely underfunded prior to the 30% drop in the stock market. The coming pension crisis was unavoidable before the outbreak. But now it’s on our doorstep. If you want to know how the collapse of the pension system can topple our country and bring about complete societal collapse, read or listen to the Audible version of my Black Swan series which sees this scenario as the trigger to the demise of America.

Prior to this crisis, Yahoo finance had an article stating that 58% of Americans did not have $1,000 in savings to address an emergency. This crisis is going to be catastrophic.

Last night, silver dropped to $12.01 which is an 11-year low. Gold also took a beating and lost over $90 in early morning trading, hitting a low of $1,454. Both metals have recovered some but are still down significantly.

However, these are the spot prices. They don’t even come close to telling the whole story. You can look out a glassy sea that appears deceptively calm when in actuality a raging undercurrent is ripping right beneath the surface.

In contrast, the premiums on both are rising. The premiums on silver are skyrocketing. I just checked both JM Bullion and Apmex and premiums on American Eagles are more than $7 per coin over spot and Maple leaves are at least $6 over spot. Both companies have little to no available inventory of silver bars.

This tells me far more about the state of the real silver market than the spot price. The same type of thing happened in the early days of the 2009 crisis. The spot price quickly caught up. We could be on the verge of a huge upswing in silver and a massive shortage in the physical metals market.

If you have a fully-funded emergency fund, plenty of beans, bullets, and Band-Aids, this might be a golden opportunity. But don’t dip into your emergency cash reserves to buy.

If you don’t already have the bases covered to endure a full-scale financial collapse, don’t get distracted by shiny objects. You can’t eat silver, you can’t defend your home with silver, and you’d need an awful lot of it to live in.

I do hope you’ll take it seriously—the health risks as well as the economic implications. I’m not going off my property unless I absolutely have to. Staying home is going to be a big adjustment for some folks but it’s the best thing you can do to help flatten the curve. The more we interact with one another, the quicker the virus spreads and the harder that will be on our health care system.

People who get really sick from Covid-19 need ventilators, often for several days. We have a limited number of those and we have a limited number of doctors and nurses who are available to care for the sick. Do you part and stay home.

And pray. Pray for one another. Pray for our country. Pray for our healthcare workers who are going to be facing unimaginable challenges in the weeks ahead.

Hopefully, like the common cold and other pathogens in the coronavirus family, Covid-19 will die down when humidity and temperatures start to rise. But even if it does, don’t take your eye off the ball. We’re likely to get another round of it in the fall.

God bless and happy prepping,

Mark