If investors should learn anything from the past couple of years, it’s that listening to the mainstream financial pundits is a sure path to bankruptcy. The same “gurus” who told us that Trump would lose in 2016 and Brexit wouldn’t happen also predicted that December of 2018 was the market top for the Dow Jones.
They were wrong time and again, but somehow they get to keep their jobs and continue to mislead the public. Fortunately for my faithful readers, I was pounding the table telling people not to sell their stocks and to hold onto their gold. For those who took my advice, they’ve profited handsomely from the tandem rise of stocks and commodities.
You see, I knew that last year’s outperformance of the U.S. dollar was an anomaly and that nations like China, Russia, India, Turkey, and Iran have been dumping the dollar like a hot potato. I also knew that President Trump would never allow the Federal Reserve to start a tightening cycle – especially with an election cycle coming up next year.
When Fed Chair Jerome Powell experimented with hiking Treasury interest rates in Q4 of 2018, the Dow Jones took a dive and retail investors panic-sold their stocks. They did so unnecessarily, it turns out, because no central bank wants to be held responsible for precipitating a full-on market crash, and Powell would be Trump’s perfect scapegoat if the market collapsed.
As a result, the threat of rate hikes in 2019 was summarily replaced with talk of “patience,” and now it’s not a question of if a rate cut is coming, but when and how deep: the customary quarter-point cut or a more aggressive half-point haircut? Either way, it’s the government’s best strategy for a happy market, at least in the short-term:
The President, meanwhile, has made it crystal clear that he wants to devalue the dollar, tweeting that the U.S. should match China and Europe, who are “playing [a] big currency manipulation game and pumping money into their system in order to compete with [the] USA.”
And let’s face it: the President is almost certain to get what he wants. He wants rate cuts, and there’s no doubt that he’ll get them – it won’t be long now. Trump wants to devalue the dollar in order to encourage the international trade of American goods and make it easier to pay off the debt – and his vision of a cheap U.S. dollar will come to fruition sooner, rather than later.
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If you’ve been around long enough, you’ll know what happens next after the dollar is aggressively devalued. Remember the horrendous inflation of the 1970s? The price of consumer goods went through the roof as the U.S. dollar tanked, and plenty of people will recall that painful episode in American economic history.
What they might not recall, though, is that the precious metal market embarked upon a Golden Age as gold entered into a massive bull market: the dollar’s weakness was gold’s strength as the spot price sailed from under $200 per ounce to $700 by the end of the decade:
As we head into 2019’s second half, we also note that Judy Shelton, Trump’s pick for the Federal Reserve Board of Governors, not only favors rate cuts but also supports a return to the gold standard. Any way you parse it, gold is setting up for a spectacular move through the end of next year at the very least.
The corporate media pundits will be back at their soapboxes again in 2020, predicting the election outcome and making excuses when they get it wrong. You have my full permission to ignore the noise and concentrate on your gold position – it’s the clear winner no matter who gets elected.
First Majestic Silver is a component of most mining ETFs, most commodity-related hedge funds, pension funds, and a core position for us here at Crush The Street. It’s up over 100% since November of 2018, and it’s done this with a 15% move in silver.
Expect more parabolic moves as silver closes in on $20 in my opinion…
On June 18th, I put out a piece about gold recovering and the investment community still being in denial. I profiled Barrick Gold in that email as a safer play because of the billion-dollar giant it already is, and here we are today, just one month later and up 25% on this company alone. Again, aside from just owning physical gold, this is a “safer” way to expose yourself to gold and have the upside that comes from owning the miners.
This year, Bitcoin is 200%+ from where it started out. In my opinion, it’s just building support at the $10,000 range until it skyrockets higher. $20,000 Bitcoin is probable and inevitable at this point.
This year has been all about investing in what is PROBABLE, not speculative – or even certain, for that matter.
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This work is based on SEC filings, current events, interviews, corporate press releases and what we’ve learned as financial journalists. It may contain errors and you shouldn’t make any investment decision based solely on what you read here. It’s your money and your responsibility. The information herein is not intended to be personal legal or investment advice and may not be appropriate or applicable for all readers. If personal advice is needed, the services of a qualified legal, investment or tax professional should be sought.
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