Hey friends. I don’t know about you but my thinking is that we are becoming more and more a paper-driven stock market. The money printing press has been running hard for years as the U.S. debt goes ever higher.

Record-setting gold just dipped below its recent $2,000+ per ounce and silver is a bit off its recent highs but the precious metals have been soaring alongside the vicious incline in major stock market indices since the lows of this past March. Normally, inflation or the threat of it is a reason behind rising precious metal prices. But, to date, inflation remains tepid.

What’s driving both the equity markets and the precious metals up and up? Even before COVID-19, a full-employment economy wasn’t indicating inflationary threats and the Fed was keeping interest rates very low.

After printing so much “fiat” money without running amuck into uncontrollable inflation or deflation, I wonder if we’ve finally convinced ourselves that we can indefinitely use the printing press to restore an ailing economy or keep a growing economy growing — and, oh yes, even manage to carry an infinite amount of national debt based on a belief that interest rates can be kept near zero forever.

It is my belief that the current stock market is being upheld by a mass of stimulus money injected, near-zero interest rates (making fixed-income investments unattractive), a host of new retail investors due to downtime from COVID-19, recent “free” commissions on stock trades, and so forth.

Personally, I’m not prepared to accept that a “new day” has dawned and that hard consequences of financial mismanagement can be perpetually avoided via monetary policy.

You’ve heard balance sheet talk from me till you may be weary to the bone of it. But when it comes to putting hard-earned savings under the custody of another to manage, please keep in mind the importance of what the balance sheet can reveal about how that company’s management team views the value of a dollar.

See you next time.