Get Ready for a World of Hurt - Buy Your Gold Today

PinkdogPinkdog Posts: 511 Silver ✭✭✭✭
From one of my favorite portfolio managers, Ross Healy, Chairman, Strategic Analysis Corporation. People need to get ready for a world of hurt. Buy your gold before it's too late. Protect your savings with gold.

George Clemenceau, the premier of France in WW1, once famously stated that “War is too serious a matter to be left to the military” (often misquoted as “to be left to the generals”). 100 years later, on another battleground, the global economy, the Central Banks are battling to get people and businesses to spend. While Central Bank buying in bonds, mortgages and corporate debt to press interest rates lower and lower, has been the main weapon in this war, at least one central bank, that of Japan, has turned to buying equities and thereby supporting the Japanese stock market and maintaining that “feeling of wealth” which shareholders have when they are making money, thereby encouraging them (hopefully) to spend some of their gains. I suspect that Japan’s approach is more and more likely to be adopted by other central banks as it becomes clearer and clearer that all that Quantitative Easing is having less and less of an impact on local economies. In other words, when QE fails, direct intervention in the stock market wealth generating machine is likely to be next. The stock market is becoming too important to be left to investors. I would remind anyone who doubts this hypothesis, that a rising stock market has long been an openly acknowledged benchmark of success of U.S. Federal Reserve Board policy for years.

Today, the U.S. economy is operating at stall speed. The U.S. is in the 5th quarter of y/y overall earnings declines, valuations are among the highest in history and interest rates at the lowest ever thanks to the QE intervention (and the ongoing lack of demand for loanable funds!). A critical election is looming, with the U.S. Fed on the side of Mrs. Clinton, I suspect. Nothing must happen between now and then to kill the last generator of spendable value, the stock market, – and so nothing will. You can count on it! After November? Who knows yet? But between now and then, betting against the stock market is likely to be a fool’s errand.
The problem, of course, is that valuations are very high. We can identify 25 or more massively popular big cap stocks which, if a bear market were ever to transpire, will collapse easily as much as some of the massively over-valued high-tech stocks that we identified (many on BNN) in 2000. Only the Financials can be considered as being cheap, but they require rising interest rates to shine again, and we are not going to get rising rates – yet. Too risky to the stock market’s health.

What do we do today in this environment with our client’s money? We invest for the least risk that we can manage, holding a gold hedge in all portfolios, while maintaining a touching if naïve belief in the sweet hereafter by holding a fair amount of cash. Winning is not our goal: surviving is.

Comments

  • PinkdogPinkdog Posts: 511 Silver ✭✭✭✭
    @GrandpaBrian great insight. Companies keep lowering their earnings forecasts and the markets keep moving higher. The central banks keep printing money and people keep taking on more debt. I'm not sure how all this end, I'm guessing badly.
  • GrandpaBrianGrandpaBrian Posts: 679 Silver ✭✭✭✭
    Note that the DOW was 1000 in 1969. Now it is over 18,000. Do you really think the economic realities (the companies) behind this index have increased over 18 fold in value in just my adulthood?

    That everybody is enjoying a lifestyle 18 times better than in 1969? I think not! This is a classic case of asset inflation. The house I bought back then, brand new, four bedrooms, nice big lot cost me $25,000. Now that same house goes for a half-million. I hope that pleases the Central Bankers in some twisted fashion but it doesn't do much for me.
  • Mr_Troy_OzMr_Troy_Oz Posts: 88 Copper ✭✭
    edited August 2016
    @Pinkdog , Good post, thank you!

    @GrandpaBrian, Your experiences alone are worth their weight in Gold.
    As an 'Older dude', I've been there and done that too!
    BTW: Loved all your Youtube 'BitGold' videos! "I could identify with them perfectly!" (ouch.. #*!) :)
  • nigelmarkdiasnigelmarkdias Posts: 1,323 Silver ✭✭✭✭
  • GrandpaBrianGrandpaBrian Posts: 679 Silver ✭✭✭✭
    Thanks @Mr_Troy_Oz for your kind words and for admitting that you are over 30.

    I worked hard to convince my grandkids that I was a pretty cool guy but then I made the mistake of telling them my first car was a Gremlin ($2400 brand new).
  • nigelmarkdiasnigelmarkdias Posts: 1,323 Silver ✭✭✭✭
    edited August 2016

    Thanks @Mr_Troy_Oz for your kind words and for admitting that you are over 30.

    I worked hard to convince my grandkids that I was a pretty cool guy but then I made the mistake of telling them my first car was a Gremlin ($2400 brand new).

    50+, am I. :)
    Gremlin One of the designers was also called Nixon
    No wonder Chrysler bought AMC & Daimler & Fiat bought Chrysler.
  • GoldmattersGoldmatters Posts: 3,996 Admin
    @GrandpaBrian What's cooler than the prepaid card or a GoldCube?? Certaintly they think you are cool after seeing those! I do!
  • MajesMajes Posts: 41 Copper ✭✭
    Great post, my first car was an AMC Javelin lol... Wish I had held on to that baby....
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