hey everyone welcome to my channel and welcome back to my subscribers this is bald guy money i am bald guy and today we are talking about the federal reserve quantitative tightening interest rates and what this all means with respect to hard assets and whether this new talk about responsibility with respect to fiscal and monetary policy is actually going to make a difference to the markets beyond what we've seen already this video will be a deep dive into the market and is absolutely crucial to


watch if you hold precious metals if you are interested in or are concerned about the real estate market or if you are concerned about your 401k or other retirement investments because once i've finished explaining what exactly is happening i will be showing a chart like this to show my recession outlook on these four assets so silver gold real estate and 401ks or or stock investing and whether i am buying selling or waiting for more developments so be sure please to watch this video to the very end because it is jam-packed


with important information that will help you understand the actual situation in plain terms as well as mathematical analysis showing the reality of our situation and just a warning to everybody out there it's very shocking as always this is not advice and if you could take a moment right now to hit the like button in support of my channel and in support of this content it will help to continue to grow this amazingly supportive community and if you need any other reason it's my birthday today so you


know if you're looking for another reason to hit the like button maybe that's a that's a good enough reason in itself so we start off today with janet yellen and for those of you not familiar with her she used to head up the federal reserve and is now the treasury secretary for the united states of america in her current role she is the principal the number one advisor to the president of the united states on all things associated with economic and government spending policies also known as fiscal


policy and despite this woman's impressive resume and experience she said this a couple days ago basically admitting that her thesis on inflation being transitory or in simpler terms a temporary issue was absolutely wrong and putting aside my personal feelings towards her and her associates at the federal reserve it's amazing that such a well-educated person could have missed this especially considering the fact that a lowly bald guy was inspired to create a youtube channel last year to


sound off on this topic so there it is i told you so and now as a result of massive inflation the current head of the federal reserve jerome powell has declared war on inflation and as a result we are seeing interest rate increases which for my international viewers are being copied by other governments around the world and equally as important as the interest rate hikes in this war is what is covered in the headline of this article which is the fact that the federal reserve will start to reduce the size of


its 8.9 trillion dollar balance sheet seen here and this balance sheet has actually increased in size by 10 times since 2007 and it has flooded the market with money because in the simplest terms possible and i want you all to understand this this number represents different forms of money the federal reserve has created and let loose in the market and if we look at the next chart you can see how that breaks down more or less with currency in circulation shown in blue deposits in banks for for them to lend


out to borrowers shown in orange and a treasury balance which represents the purchase of treasury bonds are government debt from commercial banks in green and this is often referred to as reverse repos so if you've heard that term before this is what people are talking about and just to note to those adding up the numbers this chart is showing selected liabilities only as it stands today the total fed deposits or orange line are actually at 4.6 trillion dollars the treasury balance so the green line


is a total closer to 2 trillion with the currency number on the chart being the only correct one there and this is where we can start to check whether the fed's plan will significantly impact the market and exactly how much of the nearly five trillion dollars they have created since 2020 will actually disappear from the market and whether or not it's enough to actually have a significant impact on inflation and we can do that because they have made their plans known and to the regular person i am sure that


the plans the fed has been talking about in the news sound extremely ambitious because this is what have they this is what they have committed to and by the way i have done a lot of research following jerome powell's statements these numbers weren't actually all in one place or in one interview so please feel free to add to the discussion in the comments section on these numbers if you have any questions or comments on them but in a nutshell the fed will sell 95 billion dollars in assets which is


fancy talk for they will start to take the money they created off of the market and they will do that each month from june so this month till the end of 2024 and that's a total of 31 months resulting in a total removal of 2.945 trillion dollars from the market and this is really rattling the markets in general as we've seen the stock market which is usually a leading indicator sell-off in dramatic fashion since the beginning of the year silver is marginally down since the beginning of the year and we've covered the


reasons why back in my silver price to go up video from from may 14th and now there are whispers of a correction in the housing market due to the increasing cost of borrowing money and unless you're heavily invested in energy stocks that are in oil or gas or other forms of energy this gold is probably the only thing in your portfolio that's doing really well right now because it is actually up three percent since the beginning of the year and outperforming all of the major market indexes out


there except for of course energy as i've just said and as a result of this shake-up and i know a lot of my viewers who are holding stacks of precious metals as well as those who own their homes or are looking to buy a home or who have 401ks these people you people my viewers are very concerned and it's important that we quantify what the impact will be so i have put this chart together to show you exactly how much money the fed intends to take off of the market and as you can see it is one third of their total balance


sheet now if we isolate this figure and look at only this figure it seems pretty horrific it can look like a lot but just take a look at the figures below there you can see the five trillion dollars i mentioned before that is the amount of money the federal reserve queued so printed into existence uh since 2020 and they only intend on pulling 60 of that out of the market which makes the 30 uh 33 of their total balance sheet reduction seem a little less significant and if we take a look at the total m2


money supply which is a great indication of exactly how much money is really sloshing around in the market if we account for the nearly three trillion dollars the fed plans to take out it actually seems like a small sum considering that isolated it would leave us well above pre-c19 levels and you can see that denoted in the october 2020 red box at the 18.7 trillion dollar mark and this brings me to my point on qt or quantitative tightening which is the reduction of the money supply the numbers we are talking about are not as


significant as what the fed the biden administration and the mainstream media would have you believe that paired with the fact that the u.s government and governments around the world for that matter have so much debt which limits how much they can actually raise interest rates i am sorry to say it but i am not expecting inflation to go away anytime soon the current levels of inflation are baked into the economy the prices are not going to go down so anybody expecting price deflation i'm sorry to


say it's not going to happen and for those of you who are on a fixed income i'm really sorry to have to break this information to you so i want to reveal to you all and i wanted to use this video to show you exactly how i am viewing the asset market right now covering the main assets that i know are most relevant to my viewers so all of you at home and again if there are assets i have not covered in this video let me know in the comments i can make that happen for you i can do a follow-up video where i


analyze those assets and just before i re i reveal the chart i will be using the term dca a lot that means dollar cost averaging and it's a term you should all be familiar with it is the practice of investing a fixed dollar amount on a regular basis regardless of the share price or the commodity price or the the price of whatever it is you're investing in and that's what i'm talking about when i'm talking about dca and thank you charles schwab for the articulate definition so here is the breakdown and we're going


to talk about them each individually starting with gold so my outlook for gold in 2022 is strong meaning that i think the price is still going to go up my reasoning behind that is and if you saw my february 14th video on gold you'll recognize this but this is it in that video i said that money was going to be pulled out of riskier more speculative assets and we've seen that so far and it will be put in to safer assets like gold i estimated that amount to be around 18 trillion dollars details on that are in the video


but i gave three different scenarios on how much of that 18 trillion dollars i expected gold could capture and that broke down in levels of five percent 10 and 15 percent giving us corresponding price targets for gold you see that on the right side of the graphic and they ranged from dollars per ounce all the way up to two thousand three hundred fifty three dollars per troy ounce and that actually came true in march as we got up close to the two thousand fifty dollar per troy ounce mark before coming back down


but i do expect a retest of those higher levels sometime this year so coming back to my table my personal strategy is to hold what i have right now but dca in less aggressively considering the fact that we are on the upswing and i never dca too aggressively into things that are moving upward in price that's that's just my rule as a that's a rule of thumb for me so i will dca less aggressively this year than i did in 2021 and i will likely only add one or two ounces to my stack from now from today


till the end of the year now when it comes to silver i also covered this in a recent video and my outlook remains unchanged as a reminder here's the timeline i put together where i said we will likely start to see significant price moves to the upside on silver around q2 next year with a price ranging between 39.50 per ounce up to 50. 52 per troy ounce by q1 2024 now i know some of you have sentiments that it will go higher i sincerely hope it does but this is what the numbers are telling me so please don't be too cruel


in the comments when you want to tell me that silver is going higher please understand that this is what the numbers are telling me and if you want to argue with me please argue with the numbers not with me personally i'm not a bad guy i promise you that moving on to real estate and this is important an important message for those of you who own your homes maybe you have been considering lately of downsizing your house moving into a smaller place and keeping some of the the leftover money to to live off of let


me say that if you're not making that deal to downsize right now to sell your house right now i would personally wait it's not advice but i offer this up as as a way of supporting what i'm saying interest rates on mortgages are on the rise this graphic was taken from the washington post an article that i found online which i'll link up actually in the video description and you can take a look at it yourselves but it basically shows exactly how much mortgage rates have risen versus last


year and earlier this year and for those of you wondering how this actually impacts how much people are paying to the bank for their monthly mortgage payment i can say this while researching for this video i found that average mortgage payments have already increased more than 40 percent in one example i found a person who had been paying 1 300 a month for their mortgage is now paying 1 900 a month for the exact same property for the exact same mortgage now as a result of persistently high home prices as well as increasing costs


associated with borrowing money to buy a home so those higher interest rates on mortgages we are starting to see people drop out of the market as highlighted in this article from forbes so my message to my viewers is i would personally wait again it's not advice i'm just saying what i would do and actually what i'm actually what i'm doing right now because this is going to start turning around as soon as q3 this year now many of you know that i am an investor in real estate residential


rental units to be exact and if you're like me this is a moment where you'll be able to exercise your ability to increase rental prices with people's ability to borrow money getting more difficult and the cost of borrowing that money becoming more expensive demand for rentals will undoubtedly increase as the demand for actually purchasing homes decreases and if you're renting a place right now this is this is kind of what i would do if i was in your shoes i would say now is the time to start seriously saving up


for a down payment on buying my own house and if the reason for that is because once the prices come down that's going to be a fantastic moment for you to pounce on the market and take advantage of the lower prices once they start to correct and that is why i am doing this with my own personal real estate strategy so i am holding on to my real estate the the ones that i own right now i'm not looking to to sell anything i'm not looking to buy anything new at the moment but i am waiting for


the correction before i buy my next property and remember this owning real estate is true freedom real estate is two-thirds of my personal portfolio and if it's not on your radar and you're watching this video right now owning real estate absolutely should be because it is the hardest asset in existence now to the last topic and we are talking stocks and 401ks because i know a lot of my viewers have these and if you are nearing retirement and are worried about the value of your portfolio it's crucial


it's absolutely crucial that you watch this part because i first mentioned this back on october 5th and the video is there if you want to go back and watch it and sadly the video did not get many views but in that video i showed this and i said that the valuations of companies compared to their earnings was way out of control it was too high and i showed that using a very simple analysis of historic p e ratios and the p e ratio just in case uh you're not familiar with that term is the price


of the stock or the company versus the actual earnings of the company and what i said was that we are clearly in a bubble now i also said that the bubble we were in at the end of last year wasn't as big as the dot-com bubble or the financial crisis bubble we experienced when the housing market crashed in 2009 2010 and you can see where we were with respect to the stock market before those crashes here and here compared to when i made the video back in october 2021 and what i specifically said is that i


expect a 25 pullback in the market as a whole to correct for the crazy valuations that were a direct result of easy money coming from the federal reserve and as it stands today i stick by that number so if you're holding stocks or you have a 401k this is what i think you should probably be looking forward to or at least preparing for in the near future let's take a look at it so if we take a look at the dow jones industrial average which i think is the best way to benchmark this as it stands today we are down about


nine percent from all-time highs which we touched in november of last year in comparison the s p 500 is down about 15 so if i was holding a diversified retirement instrument like a 401 k i would still prepare for the value of that 401k to drop another 17 from here that would be my high end target of the drop before we start to see a recovery now does that mean panic and sell everything for those of you who are very close to retirement or are already retired i would say compare the value of your


portfolio today versus where you were back in let's call it early 2020 or late 2019. if you're still in the green over that period of time and many of you should be in the green you might want to consider taking a little bit of that money if you're able to withdraw a little bit of that money at no cost to or or penalty to yourself you might want to consider taking out a little bit of that money again totally your choice but it may help you sleep better at night and keep it somewhere on the side just


in case you another opportunity comes up or save it up for a rainy day but if you're like me and you still have a long way to go before you retire well i can't tell you what to do but this is what i'm doing i am actually increasing my dca as we fall because the way i see it it's moments like this where real money is there to be made and i will even go one step further in this video and tell you exactly what it is i am dca into here is the list you can see google facebook which has changed its name to


meta and i know a lot of you out there don't like this company and for very good reason but the fact is that there is a lot of value there so much value that even michael bury who was featured kind of made famous in that movie the big short if you've seen it the guy who shorted the housing market he is actually buying facebook meta stock right now so if you like money but hate facebook i suppose you need to choose what's more important to you i also have some invite which is really priced low right now


it is a biotech company that specializes in genomic health and they could be an important player in the health industry in the future and that is why i've decided to start dca into it and if you're curious about that i highly suggest researching the company and i am also dca into amazon and baba so alibaba still because these companies both have great fundamentals and are diversifying their income streams and the stock prices have plunged recently so that's what i am personally doing and on the topic of


amazon i actually only started dca into amazon i bought one full share at 2 200 just for full disclosure to let you know what i'm doing and how i'm doing it ladies and gentlemen if you have made it this far i thank you i thank you i wanted to give you a full update on what i'm doing and how i see things it's not all doom and gloom from my point of view we have been in worse situations if you remember back from 2008 to 2010 i believe the stock market actually took a 40 haircut i don't expect that kind of


crash to be happening now but we still have a little ways to go down before we start going back up again and again if you're holding cash inflation is here to stay and you need to prepare yourself for an environment where inflation is going to continue to happen and that said that's again why i started the channel converting cash into assets into things like silver into things like gold investing in real estate owning some good companies not a lot of good companies but some good companies owning


bitcoin which i didn't cover in this video but i can cover it if you request it please drop me a comment and let me know what you thought of this video give me feedback to let me know if you want more long format content like this explaining in detail what i'm doing and why i'm doing it and if you haven't dropped a like yet remember hey it's my birthday drop me a like please as always i wish you all the best i wish you all health i wish you all happiness see you in the next one


bye