Matt discusses his latest Investor Letter. In it, he outlines how 2018 seemed like it would be a good year but instead has become a gut punch for investors.
Matt describes the development that continues behind the scenes in the mining space including takeovers and acquisitions. He doesn’t feel that we are in a bear market, but people are beginning to raise the question. Based on the average length of historical bull markets 2018 looks like a consolidation period before another move up.
He thinks the turning point is coming soon and will be V-shaped. There are some short-term headwinds and if the slide continues the reason will be the US Dollar. The rate hikes have propped up the dollar, and other countries have not followed suit. Europe remains a mess and is half of the US Dollar Index basket which is working to the dollars benefit.
The US Dollar has some headwind due to political instability from upcoming elections. If the Democrats take the house, there may be impeachment talks regarding Trump. The US fiscal situation remains poor, and the Republicans have done little to manage the national debt.
Massive deficits continue, and the Debt to GDP ratio is forecast to continue deteriorating. A lot of high-tier companies have sold off recently and are likely good deals at these levels. Royalty and streaming companies are also good deals as they should be able to ride out the rough periods.
Lastly, investors should look at private placements because there is competition for capital.
For the vast majority of people, wages have been stagnant since the 1970's. What happened in 1971? Well, that was the year that the U.S. dropped what was left of the gold standard. The major beneficiaries of that fateful decision have been the politically-connected and crony 1%.
Gold and silver prices ended last week strongly, but worked sideways and downwards throughout this week and will likely end around $1200 oz gold and $14.60 oz silver.
We will be getting to our week’s interview in a few brief minutes, BUT to begin I want to share with you some highlights from a video I stumbled upon about a week ago.
In the clip are you might recognize such names as Larry Kotlikoff (a professor who often testifies before the US Congress, warning about the our having some $210 trillion dollars in total debts and unfunded liabilities at net present value).
As well you will se e former head of research at the Bank for International Settlements, William White. And finally the man speaking most of the time, is a german monetary and development economist Richard Werner.
He speaks frank and openly upon two points we will be discussing this week amongst many others.
Emerging market currency chaos thanks their recently acquired $14 trillion in US dollar denominated debts, as well as the central bankers wet dream of a future cashless society where central banks can more easily bypass the more traditional fractional reserve based model of today.
I am a big believer that much of the global economic growth since 2008 has been driven by two factors: Central bank easing, and Chinese economic growth.
Neither are sustainable tools for growth. China's economic growth in the last 10 years has largely been through a massive creation of debt.
Now, the Chinese government is trying to slowly deflate that bubble in a controlled manner. Regardless of if they do it slowly, or gets out of control, I believe the global economy will suffer.
Record low metals prices could be a bad indicator for slower global growth, especially economies outside of the U.S., this according to Edward Egilinsky, Managing Director, and Head of Alternative Investments at Direxion.
“Right now, with most metals at yearly lows, or multi-year lows, it does say that the economy is slowing down a little bit, at least from a global perspective,”
Egilinsky told Kitco News. He added that in metals have been particularly sensitive to a strong U.S. dollar this year. “I think the biggest reason why the metals, whether it’s precious or industrial metals, are one of the worst performers this year, is because of the strengthening dollar,” he said.
According to Egilinsky, contrarians would do well to be bullish on gold right now, owing to a historically high net short position that could cause the yellow metal to rebound.
He added that alternative commodities, especially grains, have the most potential for gains by year end should the Trump tariffs on China de-escalate.
This graphics compilation shows five examples of properties in some of the most expensive cities in the world that you can rent at or just under $1,200 a month, to match the current gold price level of $1,200 an ounce.
With gold having reached one year lows on the back of a strong dollar, the yellow metal has been steadily losing its buying power, especially against other hard assets, like real estate.
Meanwhile, property prices in New York City, the largest city in the U.S., have steadily risen, especially relative to gold. Whereas in 2012, it cost less than 1,000 ounces of gold to buy an average home in Manhattan, it now costs around 1,300 ounces, up 30%.
As chief investment strategist of Clarity Financial and chief editor of Real Investment Advice, Lance issues commentary weekly on the financial markets.
He sees a major market correction/crash dead ahead, likely in early 2019 as the US economy offically slides back into recession -- though he's open to it happening sooner than that.
Based on the huge debt / deficit excess that have built up in the economy, paired with the tremendous overvaluations in asset prices seen in today's markets, Lance expects economic growth to remain anemic (at best) for the coming decade.
Andrew Maguire explains how the newly created Kinesis Monetary system, which combines gold and silver with block chain technology, enables transactions and earns a yield.