Who wins in the next leg down....or hyper up?

The market has been on a tear, providing you only look at top 30 companies and ignore the rest.  The part is going strong until the music stops.  The FED hasn't indicated any willingness to stop creating free money, and has even go so far as to change the definition of Inflation.

I can't say of the market will decline 25-50% from here, if the FED wasn't printing unlimited new free money to be used through a shell company to circumvent law, pretty sure it would .  And my guess is so does the FED, hence their unusual (legal?) activities to 'save' the economy.

What I do know, with equal conviction I had in January about the impending market decline, is that there will be consequences.    The FED doesn't give money directly to individuals so they can climb out of debt or pay bills.  If they did then the economy would have much less distortions.

Instead its through the financial companies, and they can't micro-manage how the money moves through the economy.  Therefore the free money will find places to go.   I still think Gold, Silver and mining companies will continue to benefit.  GDX moved from 16 dollars to 45.78.   I expect GDX to hit 100 if not higher, I would get nervous once GDX hits 160-200 as a potential all time top.

The problem with Gold is of course, that its physical and subject to countries import/export taxes or restrictions, as well as governments putting restrictions on it.

We have seen that Crypto has faces similar issues as governments tax or block the use of it.  However, being virtual if you can connect to the 'blockchain', you can move your resources in spite of government restrictions.

I believe that if the market falls, everything will go down, just some things not as far as others.  In 2009, GDX did not fall nearly as much as the market, and I expect the same thing as 'smart money' continues to move into the sector. 

I think the same for Crypto currencies and to a lesser degree cyrpto miners miners.  I am in substantially into these Cryptos:

Bitcoin ($11.5K) - It is the premium crypto, that is the main reason.

Ether ($400) and XRP ($0.275) are two crypto’s entering into mainstream currency trading in Japan on 8/31/20. ( click to read )

Bitcoin Cash ($270)  and Lite coin Trust  ($58)  to be listed as a trade able stock ticker (BCHG & LTCN) , and it has passed its first hurdle. (click to read)  

The reason I chose these Crypto's is they are set to be pioneering into trading on currency exchanges or as a stock ticker.  This is a game changer, as you can move into Cryptos in a manner that many more people are already familiar with.

I am hoping for 2x-10x resturns on BCHG, LTCN, Ether and XRP.  Bitcoin I think is an easy 3x before this is over.  Its possible for 10x, but 'easy money' may go to other faster moving Cryptos.

Bitcoin miners I like are GBTC, RIOT,  HUTMF, and HVBTF. (in that order)

I highly recommend Coinbase for your consideration into cryptos.

For Gold miners, GDX, GDXJ aer still best bets.

For miners, GOLD (miner stock symbol) is now being purchased by Warren Buffet.  Mr. Buffet has historically said investing in Gold or miners is 'stupid'.  Apparently things have changed. 

For other miner picks, see the list I created in May.  Everything exploded and did very well since then.

I can't say if the market will fall simply due to FED interference.  I  believe that something will shift with 14 million continuing to be out of work, massive layoffs ahead , IRS projecting a decade to return to pre-COVID employment levels, the USD plummeting almost 10% in about 6 months, Gold skyrocketing 37% since March to all time highs, a highly charged election in USA with potential a sitting president refuses to step down, COVID quite likely to surge into flu season, and various global tensions continuing to rise quickly.

Good Luck!

The world needs to move past a 'reserve currency'

When nations began trading extensively, the world order settled on a world reserve currency.For context, a brief history lesson.

USD 1920 to 2020 (100 years)
UK 1815 to 1920 (105 years)
France 1720-1815 (95 years)
Netherlands 1642 to 1720 (78 years)
Spain 1530 to 1641 (111 years)
Portugal 1450 to 1530 (80 years)

Using history as a guide, the US is due to end the USD reserve status.
But I do think this time is different, the world does not need to depend on China, Russia, Europe, or US for a reserve currency, we need a better system.

First, lets cover money and the way its created and how the world checks and balances work through economic trade pressures.   FIAT currency we use today is based on scarcity and 'faith' in the currency.  Part of the strength to currency is each country will only allow government (taxes and payments) to be done in the local currency, creating a demand.   Some countries operate solely on the national currency, while others may accept local or a foreign currency (typically USD) for purchases.

Oil for example, until recently was settles only in USD in all oil supplying countries, creating yet another demand mechanism for USD trade.

The leader in world trade becomes the defacto reserve currency.  Other countries once economically tied to the reserve currency nation has incentives to ensure their currency maintains an exchange rate favorable to that nation.

For example, if the Euro moves from a 1 to 1 USD changes to a 1 to 2 USD ratio, products bought in the USA from Europe will raise significantly in price.  For simplicity if we assume a direct relationship, a BMW that costs 50,000 will move to 100,000 USD if made in Europe and shipped to the USA.

World trading systems have been hedging by putting assembly plants in the target country to reduce import or currency variations. This system has historically maintained a relative stability compared to world history.

However the world economic model is increasingly becoming strained, and I believe the root cause is the rate of new money creation disparity that is required by each country.   It is also becoming strained due to world demographic challenges. When the USA has been the world leader in innovation and value creation, the US is creating dollars faster than other countries enabling it to expand.  Other countries through a combination of trade demand and their central bank money creation controls keep a balance of their money creation to maintain an equilibrium of value within reason.   

As long as the world reserve currency is the lead creator of wealth, the system remains stable as other countries are controlling currency valuations based on their economic 'catching up'.

The USD has seen extreme currency valuation strength on the world stage, and I believe because the world is increasing its value/money creation at a pace that is exceeding USD dollar creation.  In effect, the world WANTS to have more USD created than organically is being created by free market.

This enables the US to generate more and more debt accelerating quicker based on the model that functioned well when the US was the organic world value creator.

The issue is at some point, the US cannot keep up with demand for new USD in true value, and is in effect just 'creating dollars' based on the trading demand.  This is when it becomes materially dangerous for a world fiat currency.   If there is at any point, a drop in demand the debt machine will be materially large compared to true new value creation from the reserve currency country.

It could find itself in a position when the currency turns out of favor, and to create more debt will require more interest , collateral or trading value.  The easy debt machine becomes a drag that could last a generation.  This debt trap was avoided when countries used gold as the trade settlement between countries, as there really wasn't material debt in the system outside of the country.

I am NOT in favor of gold as a currency, its a terrible way to trade, but it did have the effect of avoiding the math trap of paper debt.

So what to do?  The problem is what benefit does China, Russia, or Europe bring to the table?  Does any one of those countries bring material NEW value to the work trade through innovation at a pace that exceeds world demand for FIAT currency trade for the next 100 years?

I think not.  The world economies are maturing.  Combined with demographic challenges  (see picture at bottom) we are seeing currency shifting from scarcity to abundance.  Each country is producing more value to the world stage than it did compared to leaders 25 years ago, the gap is closing.  Look back to India and China in 1995 to today, wow.  What a difference the last 25 years has made.

This is why a new currency valuation trade system is required, one not based off of a country.  There are other reasons, like currency abuse.  The US recently for the first time in history created 2 trillion dollars circumventing the bond market, and allowing the Federal Reserve Bank to purchase collateralize debt.  Further the FED setup a shell company to enable activity that it is bared from legally doing in the world of finance.

These games will help alleviate near term pressure without addressing the root problem, money creation imbalances.   At some point, 1 year? 10 years? I have a hard time believing 20 years the system will fail under this strain.  And does anyone think China, Russia, or Europe wouldn't do worse?

This is why Crypto Currencies are a critical part of our monetary evolution.  The models setup today are not valid for being a currency.  However the infrastructure to accept payments and store 'coins' is essential developments for the next non-nation based reserve currency.

So while we may stay on USD or our local currencies, I believe a crypto-based reserve currency is in our future.

On the way there, I expect Gold to get a resurgence as people will return to 'tried and true' international trade settlement only to find , yet again over the last 500 years, that gold is a terrible reserve currency.

This is why I own Crypto's and Gold miners, it is the only way out of a once in 100 year shift of world value.  When that shift occurs, I am not sure what the value of USD will be when the dust settles, and I am 65 years old.

Good luck!

Population Growth according to UN 2019.  We have increased wealthier humans, but less new people, a combination that is a problem for growth.

Why is our financial system failing us?

The currency reserve, US Dollar and international central banks and banking system has been sickly, for quite a while.

I listened to a podcast that does a great short summary of the mechanical issues with money creation process.   In short, banks are generating less credit since 2008 which results is not creating new wealth.   

The currency system in place is sick, and no one knows how to fix it.  The answer will be more radical central bank actions until the system becomes healthier, or it fails.   If it fails, crypto currencies will be the next big thing along with gold.

If failure happens I think it is 10-20 years off.  But I would expect continue increase in alternative value stores until then.

In any event consider listening to this podcast, and register to download the free report.

https://podplayer.net/?id=110413759