This is a critical update from one of the best financial commentators I know, a good friend of ours, Mr. Tom Beck, who runs PortfolioWealthGlobal.com and we’re excited to share this one with you!
In the big picture, I am shocked that gold isn’t trading for $1,200 and silver at $13, in line with their production costs. We’re operating in a world that is broke, where money is freely handed out to credit-worthy entities, without regard to their need of it.
We have ZERO rates, but we also have ZERO trickle effect of credit from the financial system into the real economy.
Gold bugs have been racking their brains for years, trying to figure this out. Their argument has been the following: zero rates, debt implosion and geopolitical problems equal 10% inflation and $10,000 gold.
Some gold bugs have become best-selling authors and regulars on talk shows and online podcasts, repeating this for years – WRONGFULLY SO – and still enjoying popularity somehow.
The reason that listeners entertain these erroneous views for years on end is because they too want to believe in the cause and effect relationship of printing trillions of currency units, creating mountains of debt and seeing crumbling fiat currencies, while gold shoots to the stratosphere.
The Federal Reserve has paused, once again. From here until the end of 2020, the FED is projected to make just one more rate cut, if any.
This, of course, is creating an environment where gold isn’t attractive, in dollar terms – unless domestic inflation rises, which it isn’t looking to be.
Globally speaking, we’re undergoing a major squeeze, VERY DIFFERENT than what we underwent in 2008. Back then, debts were due, refinancing and rolling those obligations into the future was impossible and the system came tumbling down.
This time around, we don’t have those issues, but the ones we do have are SCARY in their own way.
This time we have giant unfunded liabilities coming due and we’ll need to print a tremendous number of new currency units to fund it all.
On top of that being a major concern, the ability of central banks to stimulate the economy, ESPECIALLY in Japan and in Europe, has been virtually exhausted.
If their central banks, the BOJ and the ECB, continue to monetize, all you will achieve is more of the same: higher asset prices, a larger wealth gap, social division, political instability and sluggish growth.
We’re in a situation that isn’t life-threatening or dramatic as 2008 was, but, in a perverse way, being stuck in a world where the policies of decision-makers have the effect of SHRINKING the opportunities that individuals have to advance, is also disastrous for the majority.
Not going through a recession is great, but living well below one’s potential for 10-20 years sounds WORSE to me, personally.
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In the short-term, traders love the fact that a trade deal is going to get done before the end of the year and we’ll probably hear much less about it in 2020, so we could see the indices go up by another 2%-3%, ending a SUPERB year.
No major asset class is down in 2019 – a stark contrast to 2018.
That’s the reason I stress that the most important principle of investing is to keep at it.
The problem isn’t that they’re just wrong; it is also that they’re missing out on huge gains.
When I began covering Bitcoin at $550, our staff received hate mail. The rare few, who took the time to research and take action, made a killing. The same happened a month after, when I published our independent analysis of Ethereum at $16.50 and Dash at $33.
Later on, in 2017, I published our thesis on the fact that tax cuts will make stocks much more valuable and we profiled several blue-chip names, all of which have performed extraordinarily well. Same as with Bitcoin, we were flooded with inbound mail, regarding the stock market being a giant casino, a bubble controlled by Wall Street, yet all of our Dividend-Payers are up over 30%, most beating the indices and reporting earnings in line with valuations.
We receive countless requests to look into cannabis stocks, yet in 2019, we’ve mostly avoided them, to the detriment of many and rightly so – the biggest and the smallest names are all BRUISED AND BATTERED.
Worst of all, when I announced how bullish I was on housing, the feedback was that mortgages are a giant sea of debt.
The truth is that what really great investors do, is LET GO of what OUGHT to happen in a perfect world, and instead focus on what does occur in an imperfect one.
Real estate has been a fantastic investment opportunity. In hindsight, I should have bought more.
But now comes the sad part: the party is nearly over. Central banks cannot feed the goose in the same way for another decade and it is unlikely that they could do it, once this election is decided in one year.
In other words, the clock is ticking on this low-inflation, elite-oriented world.
The coming decade is not going to be anything like the one we’re wrapping up; the one thing that will change radically is that the trickle effect of fiscal policies will drive up commodity prices and gold and silver will trade for much higher prices.
Oil is the most important component in the process of mining; as I see it, it is heading higher. If you’re not attending this current party of stock market boom and real estate rally and decided to skip it to go to the NATURAL RESOURCES festival, know that it’s about to begin and you’re the first to SHOW UP!
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