Own More of the Things They Can’t Print
Elon is still moving the crypto markets with tweets.
The major U.S. indices continue making new highs.
And gold once again failed to break through the $1,920 level after flirting with it several times.
Despite the multiple technical failures, gold is slowly but surely setting itself up for a run much higher. A sustainable run towards $2,000 and then new all-time highs will require a convincing break through the $1,920 level.
As such, all eyes are on the Fed meeting this week.
I’ve called the current fiscal and monetary experiment the craziest I’ve ever seen in my lifetime.
This week, legendary billionaire investor Paul Tudor Jones called the current economic environment “bat shit crazy.”
He also opined that this week’s Federal Reserve meeting could be Jay Powell’s most important one, and that he would go all in on the inflation trades if the Federal Reserve glosses over the inflationary trend that is obvious in the real world and showing itself even using the Fed’s indicators like the CPI.
Which inflation trades?
He highlighted cryptos and gold.
In other words, the things you can’t print. The things the companies we speculate in explore for and produce.
The interview with Jones — the self described “most conservative investor in the world” — is an important one, as he signals a willingness to own commodities in place of equities due to overstretched valuations.
I’ve referred to this period of excess as similar to the “Roaring Twenties”.
Here in the U.S., a glass box full of air — otherwise known as nothing — recently sold for $18 million. It had a cool name though and you got a certificate of authenticity for your $18 million.
I can’t make this stuff up.
There are important differences between the 1920s and what is happening today. Back then, inflation was falling and tax rates were also trending lower — subtle but important differences.
Differences that investors like Paul Tudor Jones are ready to act on.
S&P 500 multiples today are the most extreme relative to interest rates in nearly three decades.
How much more capital can be allocated to a market where valuations are higher than the peak of the tech bubble in 2000?
Like the old saying goes, the market can remain irrational a lot longer than you can remain solvent. The key is to be in the game when the pivot occurs.
Eventually math will win.
The Paul Tudor Joneses of the world will start aggressively rotating out of overvalued equity markets and start adding the stuff you can’t print.
The capital flight into hard assets and resource stocks will lead to exceptional gains in the space.
Let's get it!
Gerardo Del Real
Editor, Daily Profit Cycle
For the past decade, Gerardo Del Real has worked behind-the-scenes providing research, due diligence and advice to large institutional players, fund managers, newsletter writers and some of the most active high net worth investors in the resource space. Now, he is bringing his extensive experience to the public through Daily Profit Cycle, Junior Resource Monthly, and Junior Resource Trader. For more about Gerardo, check out his editor page.
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