The Joe-Janet-Jerome Trade
The market can remain irrational longer than you can remain solvent.
Those are the words — supposedly — of economist John Maynard Keynes.
It’s easier for markets to remain irrational when you have J&J (Janet Yellen and Jerome Powell with blessings from Uncle Joe Biden) making sure the markets know that there will be bells and whistles going off before there is a material change in policy.
That’s how you make sure that the banks, corporations and hedge funds keep their “competitive advantage.”
Heck we have a Fed member who dubs himself “team inflation.”
The recent sell-off — the biggest one day sell-off in the major indices this year — was a reminder, in the form of a tantrum, by the market to J&J (and uncle Joe) that it better know which side to be on when it comes time to decide if they’re going to start talking about raising rates anytime soon.
Which brings us to an interesting crossroads for gold.
I’ve said for a while now that the next round of all-time highs for gold would come alongside new highs in the major U.S. indices and alongside a higher dollar.
The macro backdrop for that scenario seems to be in place.
The dollar has firmed up as a result of once again looking like the cleanest dirty shirt in the currency laundry basket.
It won’t last forever. But remember what Keynes said.
Projected growth coupled with better than average vaccination rates here in the U.S. makes the dollar, the major U.S. indices and even gold (gasp!) very attractive alternatives to emerging market currencies and stock indices around the world.
Seen the 10-year lately?
While everyone is away on vacation or afraid of a one day sell-off in the major U.S. indices you should be using the recent pullback in the uranium equities as the opportunity it is.
You should be buying the better — and some high risk/high reward — names in the commodity space because they are on fire sale right now.
You should also be looking into my friend and colleague Nick Hodge’s most recent idea for spectacular gains.
It’s a little known way to play a little known mega-trend.
It might be why Jeff and Richard and Elon are all of a sudden keen to take space trips. And it isn’t one you’ll have to wait years to see if it plays out.
Let's get it!
Gerardo Del Real
Editor, Resource Stock Digest
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 Resource Stock Digest, Junior Resource Monthly, Junior Resource Trader and Junior Resource Insider. For more about Gerardo, check out his editor page.
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