Financial Analysis – Week 44, 2020

Nov 03, 2020

Market Overview

 

financial-analysis-week-44-2020

 

The week behind us was marked by annoying preparations for today in the United States, when the citizens of America elect their president.

All eyes of the business world of the planet are focused on this day, but my opinion is that, despite such tensions, the victory of the blue or red candidate will mean nothing to an ordinary American citizen, who is over-indebted, unemployed and penniless.

In the week behind us, the number of citizens seeking compensation from the state for unemployment rose to 65 million since the beginning of the pandemic, over 11,000 billion dollars were injected in the financial system, which was not enough to stop the growth of unemployment, so both presidential candidates promised to continue throwing helicopter money because they have no solution to save the economy.

 

Where does so much money come from?

The Fed prints counterfeit dollars without cover and inflates an already inflated financial bubble, which can burst at any moment. Both presidential candidates are puppets of the big capital of multinational corporations, which are fighting for dominance on the American market. Every presidential candidate has their own tycoons. Donald Trump is surrounded by financial brokers from the world’s largest hedge fund, Black Rock, which has $ 7.6 trillion in capital, while his opponent, Joe Biden, is an exponent of Bill Gates, Warren Buffett, George Soros and other stockbrokers.

 

What after today?

According to polls conducted in the United States last week, over 77% of citizens expect street riots, violence and civil war. After the Civil War of 1861-1865, America was never more divided than today. The reason for the division is the complete absence of a vision of overcoming the deep political and economic crisis. One cannot get out of the crisis by printing dollars without cover. The exponential function of printing a fake dollar can be stopped:

  1. by a new world war,
  2. by the civil war in the United States,
  3. by hyperinflation, and
  4. by a change in the neoliberal economic system and the systemic transformation of capitalism.

What will happen from this?

All options are open. I cannot exclude any of them.

Decades ago, I warned and wrote that the United States would witness bankruptcy. An empire in disarray, as I call it, will be neither the first nor the last empire to fall apart. Historically, the breakup was expected, and it is sure to come. But empires do not fall apart overnight, they usually die for centuries, until they fall apart. The United States is a patient who is dying, and in the next few months we will find out how fast that disintegration will happen.

In any case, in the week behind us, the dollar had strengthened to 1.1618, held for a few days and then, again, fell to the current 1.1749 against the euro.

Oil fell in the range of $ 37.71 to $ 39.92 a barrel all week because Russia could not persuade OPEC countries to stick to a deal to change supply, oil from Libya emerged and prices fell due to the high supply. There was no further growth in demand, due to the new wave of the pandemic.

Gold fell significantly to $ 1,858 an ounce throughout the week, as Turkey’s central banks sold 45.5 tons of gold, Uzbekistan 35.2 tons, Venezuela with 4.1 tons and Russia with 1.8 tons to defend weak ruble.

In the last eight years, since the beginning of 2013, the Turkish lira has lost 430% against gold, which is the best proof that it is necessary to move from paper money to precious metals.

Silver is still undervalued and ended trading at $ 24.22, while its current trading potential is at least $ 100, it is only a matter of time before that happens.

The price of platinum fell 4.6% in October to $ 851.50 an ounce at the end of the month.

In October, the prices of non-ferrous metals – copper rose to $ 6,694 or growth +1.3%, aluminum $ 1,848 or +4.7%, zinc $ 2,524 or +6.0% and nickel $ 15,256 or growth +6.0%.

Bitcoin has risen to $ 11,848 and I am noticing a huge growth in financial transactions with bitcoin in Russia.

We have entered the third wave of the corona crisis, the closure of European economies has begun, which will lead to a new fall of the European economy. If we add to this conclusion the terrorism of Islamic fundamentalists in Nice, Vienna and other cities and protests, demonstrations and fights of citizens of European cities with the police, due to the imposed lock, then it is clear that the prospects of the European economy in 2021 are very gloomy.

Tourism in Spain, for example, fell by 75% in ten months in terms of visits, while in terms of tourist spending, it dropped by as much as 92%, which shows that tourists spend less and less money when they decide to travel.

In the next report, I will analyze the presidential elections in the United States and the impact on the world economy and financial markets.

 

 

Branko Dragaš
Investment banker

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