Investing

Related Reading On Offshore Safe Deposit Boxes Blog

Survival And Prosperity readers may have noticed not only was this blog “rebooted” on November 1, but Offshore Safe Deposit Boxes and it’s sister site Offshore Private Vaults as well.

And right now I’m in the middle of a series of posts on OSDB about physical gold and storing it overseas.

Posts so far this week have included “Nomad Capitalist’s ‘10 Tips For Buying Gold In 2018’” and “Mark Nestmann: Offshore Your Physical Gold”.

For the remainder of the week I’ll be blogging about gold coins, carrying these out of the U.S., and a comparison of several offshore jurisdictions for storing precious metals and other valuables.

Feel free to stop on by my Offshore Safe Deposit Boxes blog should you be interested in any of this related material.

Christopher E. Hill
Editor

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Wednesday, December 6th, 2017 Commodities, Housekeeping, Investing, Precious Metals No Comments

Peter Schiff: When Stock Bubble Pops, Trump ‘Going To Have To Take The Blame’

As I mentioned in that last post, the U.S. economic expansion is now the third-longest since World War Two.

And if the next recession hits on President Trump’s watch, a number of Americans will blame him for it.

The same goes for a stock market crash.

Peter Schiff, the CEO of Euro Pacific Capital, touched on this in a recent interview with the folks over at Financial Argument, “a daily show that will cover issues surrounding the economic collapse.” From their exchange posted on YouTube.com on November 26:

FA: I wanted to start off with the stock market. I mean, we’re seeing it continually move up. And before Trump was President, he was out there saying that there’s bubbles in the stock market, there’s bubbles in housing, there’s bubbles everywhere. Now that he’s President, he really doesn’t say this anymore. And he’s saying that the stock market’s going up because of me, and it’s fantastic. When you look at the stock market, does it make any sense whatsoever, and can actually Trump take credit for this?
SCHIFF: Well, first of all, there was a bubble before Trump was elected. Clearly. And Trump pointed that out himself. That was one of his talking points on his stump speeches. There was a big, fat ugly bubble in the stock market. And if Trump wants to take credit for the bubble getting bigger, I would agree. I think there has been a lot of optimism, a lot of enthusiasm, among investors. And that has resulted in higher stock prices. But I think where Trump is getting into trouble is by claiming that the stock market going up is no longer a bubble. That now this is just a real bull market that reflects the improvement of the fundamentals since he’s been elected. That’s not the case. This is simply more air into the same bubble. And this bubble is going to burst, and I think unfortunately now that Trump has branded it- just like it was one of his buildings, he’s put the big “Trump” marker on it- when this thing pops, he’s going to have to take the blame.

(Editor’s note: Bold added for emphasis)


“PETER SCHIFF- Worst Stock Market Crash of a Lifetime Ahead of Us 2017-2018”
YouTube Video

Schiff, who correctly-called the housing bust and economic crisis last decade, speculated on the Federal Reserve’s future moves and a coming recession. From the discussion:

FA: The Fed is keeping everything steady as she goes right now. They’re not raising interest rates. They’re slowly unwinding their balance sheet. Are they backed into a corner?
SCHIFF: They’re not slowing unwinding their balance sheet. They talked about slowly unwinding the balance sheet. But the balance sheet hasn’t unwound at all. It’s as high as it’s ever been. I think this is all a bunch of talk. There’s no way they’re going to be able to shrink that balance sheet in any significant way because it would drive interest rates up and weaken the economy and affect asset prices. In fact, I think the next major move in the Fed’s balance sheet is another big leg up when they have to launch the next round of quantitative easing. Obviously, the U.S. economy is going to go back into recession. I think we’d already be in recession had Trump not won the election. And I do think that the enthusiasm surrounding his victory and the optimism, I think, probably postponed the recession for a year or two. But, it’s going to hit, and then, how is the Fed going to respond? Well, we know. In fact, Donald Trump has appointed a new Fed chairman to follow Janet Yellen that he’s confident will do exactly what she did. Or exactly what Bernanke did. Which is slash interest rates, and print more money, and buy government bonds, and buy mortgages, or buy whatever they have to buy to keep everything from imploding.

Here’s what Schiff had to say about a potential economic crisis in 2018:

I do think we’re going to see a downturn. We could see a crisis, but chances are the crisis itself will happen later.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s note: A qualified professional should be consulted prior to making a financial decision based on material found in this weblog. If this recommended course of action is not pursued, then it must be understood that the decision is the reader’s and the reader’s alone. Christopher E. Hill, the creator/Editor of this blog, is not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented on the site.)

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List Of Individuals Credited With Publicly Predicting The 2008 Global Economic Crisis

“Vice President Dick Cheney says that his boss, President George W. Bush, has no need to apologize to the American people for not doing more to head off the financial calamity, saying no one saw the crisis coming.

During an interview Thursday with The Associated Press in his West Wing office, Cheney defended the administration’s performance on an economy that is growing weaker daily and which recently collapsed in spectacular fashion. Cheney said that ‘nobody anywhere was smart enough to figure it out.’

-Associated Press, January 8, 2009

I always chuckle when I read what Dick Cheney said about the 2008 global economic crisis. Particularly that bit about “nobody anywhere was smart enough to figure it out.”

As a matter of fact, there were a bunch of “smart” people around warning about the coming carnage, in addition to the “crash prophets” I’ve been blogging about these past few days.

Gary Karz, creator/host of InvestorHome.com, cataloged these soothsayers in “Who Predicted The Global Financial Crisis?” He wrote:

In the years since the Global Financial Crisis exploded on the scene, there have been a number of articles and initiatives documenting the individuals that publicly predicted the crisis and arguably deserve credit for having sounded the alarm. This page summarizes those efforts and links to those sources (and I expect to update it over time as more information and research becomes available). While plenty of foreign leaders and professional doomsayers have long predicted the collapse of the US economy, to the extent possible it should be useful to differentiate them from those that legitimately warned about a financial crisis or critical elements of it based on some logical analysis that appears to have merit after the fact. I believe a large percentage of investors and home buyers were exposed to at least some credible warnings about a housing bubble, but clearly many people chose to ignore those warnings or dismiss the predictions of a coming housing crash and/or crisis as unlikely to come true. Separately, I was interested in hearing what these individuals prescribe…

(Editor’s note: Bold added for emphasis)

Separately, I am interested in hearing what these individuals have to say these days about the next global financial crisis.

Karz put together a comprehensive list of 2008’s “doomsayers,” which you can view here on his Investor Home website.

On a side note, VP Cheney was (still is?) a client of “Crash Prophet” Jeremy Grantham (on the Karz list), who said in a pre-crisis letter to his company’s shareholders we are now witnessing the first global bubble in history, covering all asset classes. “From Indian antiquities to modern Chinese art; from land in Panama to Mayfair; from forestry, infrastructure and the junkiest bonds to mundane blue chips; it’s bubble time!”

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s note: A qualified professional should be consulted prior to making a financial decision based on material found in this weblog. If this recommended course of action is not pursued, then it must be understood that the decision is the reader’s and the reader’s alone. Christopher E. Hill, the creator/Editor of this blog, is not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented on the site.)

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Thursday, November 30th, 2017 Bubbles, Crash Prophets, Housing, Investing, Recession 2 Comments

Nouriel Roubini: ‘For Now, I Don’t See The Crash Approaching’

While not an “official” Crash Prophet, I’ve still made it a point to follow Nouriel Roubini (former Clinton administration Treasury official, NYU economics professor, and Roubini Global Economics chairman) through the years primarily because of his early and correct prediction of the 2008 global financial crisis. Back in February 2012, I blogged about a 2005 New York Times interview in which “Dr. Doom”- as the financial media likes to call him- warned that the U.S. housing market was in a bubble that would pop and bring about a global economic recession (or even depression).

Fast forward to November 2017. Business Insider Poland’s Damian Szymański recently had the opportunity to interview Dr. Roubini and ask him about a coming economic crisis. From their exchange:

BUSINESS INSIDER: If you succeeded to forecast the biggest crash in the global economy since the Great Depression of the 1920s, I have to ask you this particular question: does the world faces the similar fate right now? Do you notice any symptoms of the upcoming crisis?
ROUBINI: I don’t see similar threats for next one-and-a-half to two years. But in a long-term, there will be some kind of crisis, that’s certain. But whether it’s going to be in the US, China or Japan, we don’t know. Will its reach be global or local? We don’t know it either. But one has to remember that a crisis is not something unpredictable, like an earthquake. All crises build up- gradually, step by step. We keep climbing, higher and higher until we reach the final point. And that- Bam! We have a crash.
BUSINESS INSDIER: So, right now, are we in the middle of this road toward the peak? Or do we just start climbing?
ROUBINI: There are certain spots in the US over-leveraged enterprise sector that can cause trouble. The non-bank financial sector or rising government debt is also worrying, but for now, I don’t see the crash approaching. But the situation needs careful monitoring. The debt has to be spent on investment, not consumption- this is the only way to avoid another financial crisis.

(Editor’s note: Bold added for emphasis)

An insightful interview, which can be read in its entirety on the Business Insider website here.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s note: A qualified professional should be consulted prior to making a financial decision based on material found in this weblog. If this recommended course of action is not pursued, then it must be understood that the decision is the reader’s and the reader’s alone. Christopher E. Hill, the creator/Editor of this blog, is not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented on the site.)

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Wednesday, November 29th, 2017 Asia, Crash Prophets, Debt Crisis, Government, Investing No Comments

Peter Schiff: Invest Overseas, Buy Commodities To Avoid Either U.S. Stock, Dollar Plummet

Turning to “crash prophet” Peter Schiff this afternoon, the CEO of Euro Pacific Capital was recently interviewed by Scott Gamm of TheStreet. Schiff, who correctly-called the housing bust and economic crisis last decade, echoed colleague Jim Rogers in warning about a future bear market in U.S. stocks. From the exchange:

THESTREET: Peter, it’s been an incredible record run here. And the levels we’re seeing now even with this slight pullback were record highs not too long ago. So, what do you say?
SCHIFF: Well, the bubble keeps getting bigger. Donald Trump called it himself as a candidate. He said it was a big, fat, ugly bubble. He was right then. He’s wrong now because now he denies it’s a bubble because he’s now the President and so it’s his bubble. And so he’d rather it be a bull market. But the valuations here really are extreme. The complacency is also extreme. I mean, investors are willing to pay very high prices and have very little worry (chuckle) that the stock market is going to go down. And people have very short memories. I’ve mean, we’ve had two major 50 percent declines in the stock market this century, since 2000. So we’ve had the market cut in half twice and it can easily happen again, yet nobody seems concerned. And I think one of the reasons is because the last two times the market went down the Fed was able to bail out investors to bet on one bubble by inflating a bigger one. So a lot of investors may have been conditioned to believe that even if the market implodes, if they hold on, they’ll get their money back. But the third time might not be the charm. It’s possible that the Fed can’t blow a bubble big enough to bail out investors this time…
THESTREET: So do you think that tide kind of turns in the next year?
SCHIFF: Hey, I don’t know. There’s no way to know. I mean, I think Donald Trump has nominated somebody who will try and do his best to keep the air in the bubble- cut rates, QE 4. But at some point, the market forces will overwhelm the Fed. The market will go down. And if it doesn’t go down the dollar will collapse instead. But either way, you’re going to see the real value of U.S. stocks come way down, whether it happens nominally or not. And I have a feeling that if the Fed prints enough money to prevent the market from going down dramatically, then the real losses will be even bigger because of the implosion of the U.S. dollar.

(Editor’s note: Bold added for emphasis)

When asked about advice for investors as to where to put their money right now if they’re worried about U.S. stocks, the author of The Real Crash: America’s Coming Bankruptcy – How to Save Yourself and Your Country told viewers:

People who are in the U.S. market are overlooking much better returns from much better valuation levels that are happening overseas. So I think people should take advantage of the overpriced U.S. stock market, the overpriced U.S. dollar, and sell, and move money abroad. Get into the international markets- developed and emerging. Get into the commodities space. Look at oil hitting a new two-year high again today. This is going on in commodities across the board. We are coming off of major bear markets. We’re in the infancy of new bull markets. And I think the dollar is about to get killed. This is the first year in many years now that the dollar is down. But I think it’s the first of many. I think the dollar could fall for the next 5 to 10 years in a major, major bear market taking the dollar to all-time record lows. And this will enable enormous profits for people who are invested outside the U.S. in the right currencies, the right assets, the right companies. That’s what I think we’re doing with our clients at Euro Pacific Capital and that’s certainly what I’m doing with my own money.


“Peter Schiff Slams Bitcoin, Federal Reserve and Antitrust Regulators”
YouTube Video

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s note: A qualified professional should be consulted prior to making a financial decision based on material found in this weblog. If this recommended course of action is not pursued, then it must be understood that the decision is the reader’s and the reader’s alone. Christopher E. Hill, the creator/Editor of this blog, is not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented on the site.)

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Jim Rogers Predicts ‘A Canned Goods Kind Of Time’ In The Next Few Years

In our present discussion of money/investing matters on Survival And Prosperity I’ve already brought up one “crash prophet” this week in Jeremy Grantham. Today, I want to talk about another “prophet”- investor, author, and financial commentator Jim Rogers.

The former investing partner of George Soros in the legendary Quantum Fund is not as optimistic about the U.S. stock market as his British colleague. Rogers sat down with Pete Sweeney, Asia Editor of Reuters BREAKINGVIEWS, and issued the following warning in a November 22 podcast. From their exchange:

REUTERS: You’ve been predicting of late a big market crash to come. Now, as we have markets hitting new highs every minute it seems and people are shorting volatility indexes apparently. I just want to move us forward a little bit. Let’s assume it does happen next year. Let’s assume all this crazy happiness evaporates in a big disaster. What do you think the strategy is for positioning in terms of assets, regions?
ROGERS: Look, let me make sure that we have it clear. What I have said was, that we will have a bear market again some day. Now, Janet Yellen, the head of the Federal Reserve in America, says we won’t. She says everything is okay now and there won’t be anymore economic problems. I happen to disagree with her, and I know we will have bear markets again. And what I said was, the next one we have when it comes is going to be the worst in your life- the worst in my lifetime. And I think I’m older than you. The reason for that being, 2008 we had a problem- too much debt. We had a problem. The next time around debt, is so, so, so much higher Pete. In the last nine years debt has skyrocketed. So the next time we have a bear market, it’s going to be the worst in my lifetime. I wish I were smart enough to know when.
REUTERS: I’m just saying, for a hypothetical, because you’ve been watching these asset markets, because I hear people talking about this a lot. The question is, how do you make money off of it? You’re an investor. So you short everything? Do you buy canned goods, ammo, stuff? What looks attractive to you, assuming that you’re bearish on this?
ROGERS: Well, I’m not short. I bought stocks this week in China, in Japan, Zimbabwe, Taiwan. So I see opportunities on the long side in markets. Doesn’t mean I’m right. The bear market maybe start today. No, but I see opportunities. But if you’re worried about that you do need to learn how to sell short. Great fortunes can be made in a bear market selling short. I’m not sure canned goods is the place yet. No, no, don’t laugh, because we’re going to have some time in the next few years a canned goods kind of time. We’re going to have serious, serious problems in the world. I’m not sure canned goods is for the next bear market. But it’s… don’t forget your canned goods.

The commodities “guru” is still bullish on agriculture, suggesting:

If you’re worried about the world, and we are going to have a serious bear market, you should think about agriculture. Because agriculture will probably do well. That is a place that will probably disconnect, to use your term, in the next bear market.

The Chairman of Rogers Holdings and Beeland Interests, Inc. elaborated on his new acquisitions, telling listeners:

I bought Japanese ETFs, Chinese ETFs, Taiwan ETFs, and Zimbabwe, the comparable of ETFs in Zimbabwe.

Finally, Rogers shared the following as the interview came to a close:

I own Japanese shares. Am I going to make money? I don’t know. But my view is, the Japanese stock market may go back to its all-time highs. And that would be a double if it does…

At the moment, I still see reasons to be optimistic in some markets that are still very depressed compared to the ones going through the roof.

Good interview questions and even better replies from the Singapore-based Rogers. You can listen to the entire 13-minute interview on the Reuters BREAKINGVIEWS website here.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s note: A qualified professional should be consulted prior to making a financial decision based on material found in this weblog. If this recommended course of action is not pursued, then it must be understood that the decision is the reader’s and the reader’s alone. Christopher E. Hill, the creator/Editor of this blog, is not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented on the site.)

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Jeremy Grantham On U.S. Bonds, Stocks, And A Market Crash

Regular readers of Survival And Prosperity may have noticed I retired the “Crash Prophets” page earlier this month (too much time to update). For those not familiar with this section, it’s where I compiled the investment activities/recommendations of “crash prophets” Dr. Marc Faber, Jeremy Grantham, Jim Rogers, and Peter Schiff (designation earned by being smart enough to spot the 2008 economic crisis and warning of future financial turbulence). Despite the retirement, I will continue to blog about the latest from these soothsayers.

And this morning I want to talk about Jeremy Grantham, the British-born investment strategist and founder/former chairman of Grantham, Mayo, Van Otterloo & Co. (currently overseeing $74 billion in client assets). In case readers missed it, a couple of weeks ago Grantham, whose individual clients have included former U.S. Vice President Dick Cheney and U.S. Secretary of State John Kerry, took part in an interview with The Wall Street Journal. The “crash prophet” discussed the booming U.S. stock market, a potential crash, and U.S. bonds. John Coumarianos wrote on the WSJ website on November 5:

With the S&P 500 up more than 15% this year, it may be time for a reality check. To that end, we spoke with Jeremy Grantham, co-founder and chief investment strategist at Boston-based money manager Grantham, Mayo, Van Otterloo & Co. and a noted spotter of market bubbles.

He thinks U.S. stocks and bonds will fail to generate inflation-beating returns over the next seven years, but he doesn’t see an imminent crash in share prices…

Mr. Grantham has already cemented his legend by arguing that U.S. stocks were overvalued in 2000 and again in 2007, anticipating the market’s two most-recent crashes. He also noted before the 2008-09 financial crisis that the relationship between home prices and income had become unglued, and said at least one large financial institution would fail.

By Mr. Grantham’s lights, U.S. stock prices are again high, with an overall Shiller price/earnings ratio (share price relative to the past decade of real average earnings) over 30, compared with its average of 16.8 since 1880. But profit margins also are unusually high, lending support to the high valuations, he says. And the Federal Reserve’s policy of keeping interest rates low supports share prices by making fixed-income investments less attractive as an alternative to stocks.

So this time, instead of a crash, stock valuations may take decades to revert to anywhere near the long-term average, Mr. Grantham says…

(Editor’s note: Bold added for emphasis)

The actual interview proved insightful, with Grantham communicating his bullishness on foreign stocks. The exchange can be read in its entirety here on The Wall Street Journal website.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s note: A qualified professional should be consulted prior to making a financial decision based on material found in this weblog. If this recommended course of action is not pursued, then it must be understood that the decision is the reader’s and the reader’s alone. Christopher E. Hill, the creator/Editor of this blog, is not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented on the site.)

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