Investor Alert: Threat of New Economic Lockdowns Grows

A late summer rise in COVID cases is triggering calls by control freaks across the globe for reimposing mandates and restrictions on the public. Civil liberties advocates are warning that crippling new economic lockdowns could be coming down the pike.

The Centers for Disease Control reports that weekly new COVID hospitalizations have jumped for six straight weeks. The latest strains of the omicron variant are being blamed.

New shots and boosters from Pfizer, Moderna, and Novavax are being rolled out that will supposedly provide protection from the new strains.

Meanwhile, public health officials are talking up widespread masking yet again – despite evidence that they do little if anything to protect healthy people who are uninfected.

Hospitals and universities have begun to reimpose mask mandates. About 60 colleges across the country have announced that students must take a vaccine for the fall 2023 semester.

The fear-mongering over the virus is returning, and with it so is the risk that new mandates could accelerate back toward full-scale lockdowns like we experienced just over three years ago.

Recalls Connor O’Keeffe of the Mises Institute:

“An overly sedentary population with concerning levels of mental illness was forced to stay inside and isolated from their friends, coworkers, classmates, and families. And to hide their faces from strangers when forced to go out.

“Six trillion dollars was quickly printed to try and delay the inevitable pain that results when millions of people stop producing the goods and services we all rely on.”

The effects of the post-lockdown spike in currency creation are still being felt in the form of elevated rates of inflation.

Former President Donald Trump and other high-profile Republicans, including several governors, have claimed that they won’t let Americans be locked down again.

Of course, Republicans had signed off on the lockdown measures promulgated by Dr. Anthony Fauci and others.

When the next public health emergency is declared by bureaucrats, it’s not clear where anti-lockdown politicians will draw the line this time around.

Even if the dark days of shuttered churches, taped-off playgrounds, and “non-essential” business closures don’t return in full force, social mood could still take a severe downturn amid a new wave of virus-fueled hysteria.

The COVID lockdowns of 2020 caused absolute chaos in financial markets. At one point, commodities markets got so out of whack that crude oil was selling for less than zero (a negative spot price) on futures exchanges.

Silver prices also briefly crashed even as gold prices held relatively firm, causing the gold-to-silver ratio to spike to a record high of nearly 130:1.

The carnage created the buying opportunity of a lifetime in silver and other depressed assets. Metals markets quickly recovered amid a tsunami of Federal Reserve stimulus cash and a massive increase in bullion buying from the public (sending premiums through the roof as well).

Bullion buying has slowed in recent months, causing premiums to fall and creating favorable conditions for those looking to accumulate.

The next wave of panic that hits markets – whether triggered by COVID outbreaks or something else – could create dislocations and distortions whose effects on prices, liquidity, and product availability are hard to predict.

It's possible that an increasingly sick population that helps drag down an increasingly vulnerable economy causes the Fed to abruptly begin slashing interest rates.

A dovish pivot by the Fed would tend to be bearish for the Federal Reserve note dollar and bullish for hard assets. But investors should brace for volatility in all asset classes to be amplified if COVID mandates and restrictions crush the economy all over again.

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