Coronavirus Infects US Dollar

Up to a month ago the US dollar was showing resilience in the face of a slowdown in the global economy evidenced by anemic growth. As central banks including the US Federal Reserve reacted by lowering interest rates, it looked as though strength in the US economy (stock market bull, 50-year-low unemployment, etc.) would see the States through the downturn, especially since US Treasury yields were that much higher than those of competing bonds such as the German “bund”. 
 
All that has changed with the coronavirus. 

Coronavirus and the vulnerability of critical mineral supply chains

Just in time (JIT) is an inventory system designed to efficiently match raw-material orders with production schedules, in manufacturing and/ or shipping a given product. The idea is to move the precise amount of material into the production process, warehouse or to the customer, ‘just in time” to be used. 

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Receiving goods only as they are needed reduces the cost of storing excess inventory, and requires producers to forecast demand accurately. This compares to “just in case”, an earlier method of inventory control whereby producers always kept enough inventory to meet periods of high demand. 

JIT has become ubiquitous in today’s consumer economy. Examples include car-parts assembly plants; food distribution networks where fresh produce must be grown, stored, refrigerated and transported to maintain peak freshness; container shipping where goods are transported in multiple modes - ocean carrier, train and/or truck - then arrive at a port to be loaded onto a vessel with minimal delay; and Amazon, which revolutionized online commerce through a highly efficient and robotized system of packaged good delivery. Imagine the coordination that goes into an Amazon Prime customer receiving a package ordered the same day. 

For most companies, most of the time, JIT works very well, as long as there are minimal disruptions to the chain of supply, all the way from the material in its rawest form, down to the finished product that is delivered to the end user. It is for the most part an efficient, cost-effective, common-sense way to run a business. 

Enter a disruption, like the Coronavirus, and the average JIT system falls apart quickly

Gold Has Immunity…Silver Has Ratio

As Coronavirus continues to spread, some medical experts say the containment phase has passed and that Covid-19 is inevitable. That would mean living with the respiratory virus in our communities, much like the flu and managing its potentially fatal diagnosis. 

“This is spreading throughout the world and it will continue to spread throughout the world,” Isaac Bogoch, an infectious disease physician at Toronto General Hospital, told CBC.

Amesh Adalja, an infectious disease physician and a senior scholar at the Johns Hopkins Center for Health Security, said, “It’s not something that we can prevent from happening in the absence of a vaccine. It’s not containable in the way that those viruses were. So this will become endemic.” He added: 

“This is going to become like some of the other coronaviruses that we have. There are four of them that cause disease every year. This is likely to become the fifth coronavirus at that capacity.”

Gold & Silver

Precious metals are among the best places to park your money in times of economic or political distress. 

Gold and silver offer stability during a period of extreme stock market volatility and low bond yields, and while they do not pay interest or dividends, they are not subject to inflation like paper currencies. 

It is also, in my opinion, a smart strategy to allocate a portion of gold and silver to your investment portfolio, knowing that precious metals can be used as a “fail-safe” currency in the event of a total financial collapse. 

Richard (Rick) Mills
aheadoftheherd.com
Ahead of the Herd Twitter
 
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Richard owns shares of Max Resources (TSX.V:MXR), MXR is an advertiser on his site aheadoftheherd.com
 
Richard owns shares of Champion Bear (TSX.V:CBA), CBA is an advertiser on his site aheadoftheherd.com
 
Richard does not own shares of Getchell Gold (CSE:GTCH). However, GTCH is an advertiser on his site and is paid by GTCH to write articles on Getchell Gold. The Management and Board of Getchell Gold Corp. does not endorse this or any article, nor do they certify the accuracy of its contents. 
 
Richard owns shares of NV Gold (TSX.V:NVX), NVX is an advertiser on his site aheadoftheherd.com
 
Richard owns shares of Boreal Metals (TSX.V:BMX), BMX is an advertiser on his site aheadoftheherd.com

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