I’ll keep this mercifully short. One commenter in my Friday night econ news post asked, in a kind of oblique way, what would I do in this environment.
Okay, I’ll play, but not without stating firmly and loudly I am not dispensing investment advice, nor am I licensed any longer to do so. We clear on that?
A liquidity crisis is already here. But this may not be like your father’s ’08 crisis. In ’08 the USD rose, counterintuitively, against every other major currency. Why? The need for USD to cover credit losses was global and NYC became a literal blackhole for USD. I made an absolute killing on the USD during the ’08 crisis and afterwards even more on the banks and zero coupon bonds. I made several people fortunes they still retain.
But the crisis now unraveling doesn’t look like one of confidence, it looks like an animal out of a medieval grotesque. Sure, the Fed might do QE. But Congress can’t do a bailout with almost $1trillion in interests payments on US debt imminent, with Trump promising $2k checks to everyone? Inflation with QE? What would you call that? It’ll be damned ugly whatever happens.
We’re I still advising investors I’d be putting them in Yuan interest bearing accounts, I’d be buying silver on the dips, JPY, SKW, and buying way out of the money puts on S&P 500 and NASDAQ. In short, if you can find an affordable way to buy puts on things that are impossible to happen, buy them, because one or two will hit big and you’ll rake in the money.
Silver’s in what’s called a secular bull market, not cyclical–cyclical means three to five year cycles whereas secular means, we don’t fucking have any idea how long ‘dis bitch going up–and this secular bull is being driven by a massive externality: China’s draconian export controls of the metal. The problem right now, from a technical trading perspective, is a failed double-top breakout. This is bearish in the near term, so under $40 buy opportunity might be. As a side note: China has a VERY long history with the white metal, but no so much the yellow one. I can recommend a good book if you are interested.
You can invest in the Yuan in several US banks/investment firms. Some accounts are interest bearing, others are just a pure play on the currency. If you want specifics, send me a DM. But the current T-bill replacement is silver, but buy it under $45 if you can. Under $40 is best.
But, for fuck’s sake, avoid paying premiums for silver. They’ll clean out your gains before you even begin.
spud
also something to think about. in a deflating economy, cash is king. and if you are heavy in investments, and metal is a investment. you might be forced into selling low to gain scarce dollars.
you are right, this might be worse than even 1929. guns, food, water, candles, a way to heat etc. might be good investments also.
Sean Paul Kelley
@spud: will there be deflation? Yeah, probably. It’s already happening in China. But our crisis will be a hybrid-crisis, like stagflation was a hybrid crisis. Regardless, it’s gonna be nasty.