There is a real and growing concern globally that something more drastic needs to be done. There are some like Jim Rickards who believe that the IMF will use SDRs to create a massive global stimulus fund that would then be spent with the goal of creating massive inflation. (I will explain that in depth next week…) In other words, the world governments realize the risk of a crash is increasing and rising exponentially, so they are looking at ways to bring about a global reset.
Unfortunately, any global reset is going to decimate the financial lives of ‘normal’ citizens while ‘saving’ the elites. It will likely be a massive wealth transfer on the order of what happened in the US in the 1930’s. Yes, that’s when the Great Depression occurred.
Getting back to the subject of today’s commentary, this information is designed to explain in more depth why I have been and continue to be invested in things like US Treasury bonds, utility stocks , etc. and why I am not interested in buying growth-oriented stocks at all-time-highs.
James Rickards recently said in a newsletter:
“One asset class we recommend right now is exposure to long-term U.S. Treasury bonds. These guarantee principal (because they’re U.S. government obligations) and offer excellent liquidity (in case you need to reallocate at some point).
Before the panic hits, Treasury bonds should perform well in a climate of disinflation, deflation and falling interest rates. Rates have backed-up recently on one inflation blip, but it’s just a blip. The overall global financial dynamic is still deflationary and the ongoing liquidity shortage will just make that worse. The combination of deflation and a global liquidity shortfall could push yields on TLT’s portfolio of long-term Treasuries as low as 1%. If yields fall to 1%, TLT could rally above $160.”
Regarding Gold
I have added some gold. The main reason for doing that is to try to protect against the global systemic risk that I briefly touched on today. Gold tends to become a safe haven asset in times of great uncertainty. Gold also tends to maintain its purchasing power in inflationary environments. And owning some gold also offsets the low but growing risk of owning cash/money markets.
I realize that this information may be somewhat alarming. You don’t need to be afraid; you need to be cognizant.
Thanks for reading and have a great weekend.
Twitter: @JeffVoudrie
Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
