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The Great Market Tide Has Now Shifted To Risk-Off Assets

A global sea-change in risk appetite & sentiment
Friday, July 8, 2016, 3:03 PM

In the conventional investment perspective, risk-on assets (i.e. investments with higher risks and higher potential returns) such as stocks are on a see-saw with risk-off assets (investments with lower returns and lower risk, such as Treasury bonds). When risk appetites are high, institutional managers and speculators move money into stocks and high-yield junk bonds, and move money out of safe-haven assets such as gold and U.S. Treasuries.

But recently, markets are no longer following this convention. Safe haven assets such as precious metals and Treasuries are soaring at the same time that stock markets bounced strongly off the post-Brexit lows.

Risk-on assets (stocks) rising at the same time as safe-haven assets is akin to dogs marrying cats and living happily ever after. 

What the heck is going on? » Read more

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Investing For Crisis

The future of stocks, gold & safe havens
Friday, July 8, 2016, 3:03 PM

Executive Summary

  • Which coming developments we can predict with certainty
  • Why the next crisis won't be like 2008
  • Why what worked post-2008 won't work this time
  • Where stocks and gold are headed
  • Where to find safe haven for your investment capital

If you have not yet read The Great Market Tide Has Now Shifted To Risk-Off Assets, available free to all readers, please click here to read it first.

In Part 1, we reviewed the market’s risk-on, risk-off gyrations and laid out the case for long-term declines in confidence, political stability and profits.  What does this new era of uncertainty mean for individual investors?

What’s Predictable?

We can start by asking—is there anything we can predict with any certainty?

I think we can very confidently predict that future central bank monetary policies will fail to generate sustainable growth or fix what’s broken in the global financial system.

I think we can predict that uncertainty will only increase with time rather than decrease. This rise of uncertainty will predictably lower the attractiveness of risk-on assets, other than as short-term speculative bets after some central banker issues yet another “whatever it takes” proclamation.

It’s also a pretty good bet that if central banks and states continue expanding credit/money that isn’t matched by a corresponding expansion of goods and services, the purchasing power of those currencies will decline.

We can very confidently predict that the authorities will continue to do more of what has failed spectacularly until they are removed from power or the system breaks down.

We can predict with some confidence that issuing more debt will provide little productive results.

I also think we can hazard a guess that the next financial crisis will be of a different sort than the 2008-09 Global Financial Meltdown.

Just as generals prepare to fight the last war, with predictably dismal results (unless the exact same war is replayed, which rarely seems to happen), central bankers are fully prepared to stave off a crisis like the one in 2008: a financial crisis that emerges from leveraged bets going bad in money-center investment banks.

My basic presumption is... » Read more

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Off The Cuff: The Prosperity Pie Is Shrinking

The root macro challenge of our time
Friday, July 1, 2016, 11:16 AM

In this week's Off The Cuff podcast, Chris and Mish Shedlock discuss:

  • The Battle Behind Brexit
    • An underlying story of the masses vs the elites
  • The Prosperity Pie Is Shrinking
    • The macro issue of our time
  • Election Rigging
    • A near-certainty at this point
  • Gold & Silver Streak
    • Finally! Some upward momentum

Click to listen to a sample of this Off the Cuff Podcast or Enroll today to access the full audio and other premium content today. » Read more

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Fortunes Will Be Made & Lost When Capital Flees To Safety

As safe havens are tiny markets
Friday, June 24, 2016, 4:46 PM

Little did I realize when creating the short video below how prescient it would quickly become in the wake of last night's Brexit vote...

It's message is simple: there's a preponderance of data that shows the world's major asset markets are dangerously overvalued. And when these asset bubbles start to burst, the 'save haven' markets that investment capital will try to flee to are ridiculously small. Investors who do not start moving their capital in advance of crisis will be forced to pay much higher prices for safety -- or may find they can't get into these markets at any price. » Read more

Insider

How My Personal Portfolio Is Positioned Right Now

You've asked. I answer.
Friday, June 24, 2016, 4:46 PM

Executive Summary

If you have not yet read Part 1: Fortunes Will Be Made & Lost When Capital Flees To Safety available free to all readers, please click here to read it first.

So, given the conclusions in Part 1 -- as well as the larger risks to the economy and financial markets that we analyze daily here at Peak Prosperity -- how am I positioning my own personal investments?

I get asked this question often. Often enough that I'm deciding to open the kimono here and let it drop to the ground. Everyone interested to look will get the full frontal.

Before I do though, let me make a few things absolutely clear. This is NOT personal financial advice. The investment choices I've made are based on my own unique situation, financial goals and risk tolerance. And I may change these choices at any moment given new market developments. What's appropriate for me may not be for you, so DO NOT blindly duplicate what I'm doing.

As always, we recommend working with a professional financial adviser to build an investment plan customized to your own needs and objectives. (If you do not have a financial adviser or do not feel comfortable with your current adviser's expertise in the market risks we discuss here at PeakProsperity.com, consider scheduling a free consultation with our endorsed adviser)

Suffice it to say, any investment ideas sparked by this report should be reviewed with your financial adviser before taking any action. Am I being excessively repetitive here in order to drive this point home? Good...

OK, with that out of the way, let's get started. I'll walk through the asset classes I own and my rationale for holding each.

The strategy behind my portfolio allocation is of my own devise, though it has been influenced in no small part by the good folks at New Harbor Financial, Peak Prosperity's aforementioned endorsed financial adviser.

At a high level, it has been constructed to address my strongly-held conclusions that:

  • Prices of most asset classes are dangerously overvalued
  • The risk of another economic contraction on par with (or greater than) the Great Recession within the next 2-4 years is uncomfortably high
  • The most likely path is we will experience a short period of coming deflation, followed soon after by one of high inflation as central banks starting printing currency without restraint (the Ka-POOM theory)
  • Capital will increasingly want to flow from paper assets (tertiary wealth) into tangible ones (primary and secondary wealth)
  • This is a time to prioritize protecting capital (defense) over speculating on how to grow it (offense)
  • Diversification is wise: just be emotionally prepared that some of your bets, by definition, will not pay off
  • In today's world of financial repression, no asset class is truly "safe". As such, asset performance is all relative.

This is not a swing-for-the-fences portfolio. It's much more of a prepare-for-the-storm approach... » Read more

Podcast

Jim Rickards: The New Case For Gold

A powerful set of arguments for owning the yellow metal
Monday, April 4, 2016, 12:32 AM

Monetary expert Jim Rickards returns this week to share the insights from his latest work The New Case For Gold, a detailed and highly-researched study of the fundamentals likely to drive the price of gold bullion in the years to come.

Rickards is quite confident that the price is going higher -- much higher in fact -- as the current world fit currency regimes falter, to be replaced by ones backed (at least in part) by bullion.

On the way to that outcome, expect the price to be subject to the geopolitical interests and aims of the largest players on the chessboard. » Read more

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Off The Cuff: Are We Entering A New Bull Market For Gold?

Likely, though risk of a short term pull-back is high
Friday, March 11, 2016, 12:30 AM

In this week's Off The Cuff podcast, Chris and John Rubino discuss:

  •  Has A New Bull Market In Gold Begun?
    • Maybe, though a short term pull-back is likely
  • Has Oil Bottomed?
    • Much harder to tell
  • Electric Cars
    • How long may it really take for them to reach mainstream penetration?
  • How Bad Will The Next Market Crash Be?
    • Very bad. This next one's for all the marbles.
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The Screaming Fundamentals For Owning Gold

We're at a moment of historic opportunity
Tuesday, December 8, 2015, 12:53 PM

Every year or two we update this report, which lays out the investment thesis for gold. Here is this year's version.

Silver is touched upon only as necessary; as a separate report of equal scope is required for that precious metal.

Gold is one of the few investments that every investor should have in their portfolio. We are now at the dangerous end-game period of a very bold but very reckless & disappointing experiment with the world's fiat (unbacked) currencies. If this experiment fails -- and we observe it's in the process of failing -- gold will provide one of the best forms of wealth insurance. But like all insurance products, it only works if you buy it before you need to rely on it. » Read more

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Using Gold to Protect Yourself In Advance of the Greatest Wealth Transfer of Our Lifetime

Where & how much to buy, when to sell
Tuesday, December 8, 2015, 12:52 PM

Executive Summary

  • Calculating the "floor" beneath which gold will likely not fall
  • The coming Great Wealth Transfer, which almost certainly will occur in our lifetime
  • How much to invest in gold
  • How to invest in gold
  • Exit strategies: when will it make sense to sell your holdings? And what should you exchange them for?

If you have not yet read The Screaming Fundamentals For Owning Gold, available free to all readers, please click here to read it first.

The Floor

The one place that I most like to buy something is as close to its replacement value as I can.  And the replacement value for gold is both below its current price of $1,080 and rising steadily. There’s a floor under the price of gold which, like any mined substance, is determined by the cost to get more of it out of the ground.

As has been true for all mining and oil production, the all-in costs of getting gold out of the ground have been rising, and rising sharply, for many years.  Currently the all-in cost to produce gold, across the whole industry, is more than $1,200 per ounce.

Here in late 2015 we are seeing lots of signs of obvious distress among gold producers because the price of gold is below their cost of production.  This will cause supply to... » Read more

Podcast

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Mike Maloney: The Rollercoaster Crash

An updated look on the coming global currency re-set
Sunday, November 22, 2015, 12:53 PM

Precious metals sank to 5-year lows during this past week. The long painful price decline that began at the end of 2011 still continues unabated. Holders of gold & silver are understandably wondering if their faith in precious metals has been misplaced. » Read more