The Global Investment Landscape
With central banks in parts of Europe and Japan setting negative interest rates, along with global moves discouraging the use of cash and the ongoing mispricing of assets such as gold and silver, it is a good time to take a step back and take stock of the global investment landscape.
Interest rates around the world are low. In many places at or even below zero. Even the FED is ‘test driving’ negative interest rate scenarios in the US.
In some places you could even be paying banks to hold your money (not the other way around)!
At the same time there is a war on cash – meaning locking you into whatever planned tax, regulatory and financial planning mechanisms governments and central banks take around the world is increasingly easier.
This is of course coupled with more and more regulations surrounding what you can do with your money. In the US, even passport revocation for unpaid taxes is now law.
With interest rates around zero, and real inflation (not the governments’ cooked numbers) around 10%, investors are feeling the squeeze. The central banks of course understand what they are doing. Pushing capital into the stock/bond/real estate markets as investors search for a good rate of return – both as the banks/bonds are paying close to nothing and real inflation is significant.
At the same time with the dramatic ‘quantitative easing’ that has gone on around the world, meaning a dramatic increase in the global money supply and global debt, there is more capital than ever looking for a home with an inflation-beating rate of return. This dynamic has artificially propped up the stock market and specific real estate markets.
At the same time the metals markets, which given the precarious situation of the Dollar/Euro (see dramatic increase in money supply/debt) are manipulated and held artificially low – through naked short selling and other means by large financial institutions working in unison (while those same institutions and more importantly central banks around the world are buying physical gold and silver in record numbers).
Another piece is oil prices. In many emerging markets, the economy (and government) rely on oil revenue. So in places like Ecuador and many others, prices of real assets, such as productive land have remained low, in part due to low oil prices.
Ways to play it
Buy gold, silver and farmland.
For a couple of thousand years of monetary history, gold and silver have functioned as money. It was only in 1971 When Nixon closed the gold window that we have had what amounts to a 40-year experiment of money not being backed by real assets (see: gold and silver).
When a currency falters (as debt based currencies always do) investors return to hard money – gold and silver.
And taking a good hard look at a money supply chart of places like the US and Europe, coupled with global debt, can only lead to one conclusion – the worlds leading currencies are in trouble.
And yet the metals markets are held artificially low, so they don’t reflect it! Did you know that for each ounce of physical gold held on the COMEX, there are 293 paper contract ‘owners’ ?!
That means that we are in a unique time. One where you can purchase a physical asset that should be trading much higher to reflect the risk in many global currencies for an artificially manipulated lower ‘paper’ price!
The other interesting play is farmland and water. In places like Ecuador and others, in part due to low oil prices and political turmoil, productive land is cheap. Being largely a cash market, land prices in Ecuador are not highly subject to the existence of healthy debt markets and prices DO NOT accurately reflect the current geopolitical and currency risks.
Get out of the banking system
You need to look no further than places like Cyprus, Greece or even in a less direct way the ‘US bank bailouts’ to understand the inherent risk in holding your assets in insolvent financial institutions.
Not only can physical gold, silver and land not be ‘bailed in’ – but their prices also do not reflect the current systemic risks.
Basically these assets are on sale. But not forever. At some point the chickens will come home to roost for bankrupt governments, bankrupt financial institutions and perhaps even for the global food supply.
This will lead to a great squeeze to take physical possession of gold and silver, and to own productive land. Which will cause prices to rise, perhaps rapidly, and possibly to levels few can imagine.
Imagine if stocks/bonds/banks/leveraged real estate in cities were not safe stores of wealth. What would that do to the price of physical metal and productive land?
This is an amazing time to be an investor. With easy money policy skewing global asset prices and assets around the world not properly reflecting risk, now is the time to take action on the great investment opportunities of tomorrow while the door remains open.
