We REALLY tried to get this into one article, but it’s just too big … so this is Part 1 of 2 … and should only take about 4 minutes to read. Click here for Part 2 …
The Story Underneath the Story …
One short year ago the world was just starting to hear about the pandemic we can’t name or the internet spam gods will censor us.
Back then, we were told that a mere 15-day lockdown would “flatten the curve” and life would soon return to normal.
Well … that’s not exactly how it turned out.
Fortunately, our friend Chris Martenson warned us it would be a MUCH bigger deal than presented by the “authorities” … and he suggested we prepare.
So we convened a panel of experts to brief us on what they saw coming … and what they thought the challenges and opportunities would be.
Remember: News and events often aren’t really “good” or “bad.” They just are. What makes them good or bad is how YOU react (or not) to them.
Back then, we theorized that lockdowns would invariably evolve into an economic crisis as commerce slowed to a crawl.
That’s because the economy is alive … and money is like blood. It needs to circulate to carry vital sustenance to individual cells and vital organ(izations).
Lockdowns are like economic heart attacks.
Based on lessons from the Great Financial Crisis of 2008, we figured the economic crisis would threaten banks and bond markets (the financial system).
The reason is simple … when payments are missed, debts go bad. And while some of this is happening, much of it is still hidden.
That’s because the Federal Reserve and U.S. government (NOT the same thing) is aggressively printing and spending as many dollars as needed to protect the financial system.
Of course, these TRILLIONS of new currency have potential consequences also.
The concern … and the end game … is the ENORMOUS pressure on the U.S. dollar … and the potential for SUBSTANTIAL inflation (a falling dollar).
Of course, a falling dollar is something we’ve been watching carefully since the birth of “quantitative easing” in the wake of 2008 …
… as the Fed printed enough currency to bloat its balance sheet from $800 billion to over $4.5 trillion. A trillion is a thousand billion. It’s insane.
Our friend Peter Schiff warned at the time that the Fed would NEVER be able to “normalize” (shrink) its balance sheet … or raise interest rates …
… and the subsequent “real crash” would be the dollar.
If the dollar fails … or even crashes … it would have intense ramifications on the world, because the dollar is the world’s reserve currency. For now.
Of course, a dollar failure would be MOST devastating to people who are exclusively dependent and exposed to it …
… those who earn, invest, and denominate wealth solely in dollars.
Maybe that’s you. Maybe you’re not worried. Or maybe you are worried but have no plan. Hopefully, you’re hedged against a falling dollar.
Real asset investing is one way to hedge.
As the millions of people in Texas found out when beset by severe and debilitating cold weather …
… the time to prepare for “bad weather” isn’t when it’s upon you … when pipes burst, power goes out, and stores are closed or sold out of essential supplies.
It’s important to prepare BEFORE the crisis hits.
Fortunately, knowing HOW to prep for a dollar crisis isn’t really that hard.
A properly structured portfolio full of real estate, debt, precious metals, energy, agriculture, and commodities is a great start.
The real challenge is overcoming the inertia to invest the time and money to actually build the portfolio while there’s still time … and the assets aren’t scarce and expensive.
Sadly, most people procrastinate until the crisis is OBVIOUS … which is often too late.
That’s why we think it’s important to learn to see the signs sooner … so the crisis becomes obvious to you sooner … so you can act sooner.
So where are we at and what’s REALLY happening?
As we discussed last time, gold and silver were up 25% and 47% respectively in 2020. Or stated properly, the dollar collapsed by those amounts.
Several of our smart friends are telling us that the reality is the dollar IS collapsing, but it’s being hidden.
Then again, it’s hard to hide …
Real estate is up and many folks are sitting on gobs of paper equity.
Oil prices are up … and this was BEFORE the big cold front hit … with the price hitting $60 per barrel.
It doesn’t seem that long ago oil was in the mid-20s … even as low as NEGATIVE $40 a barrel. So plus $60 is a BIG increase … especially because the economy is still not fully open. What happens then?
(Of course, smart investors grabbed oil production when it was dirt cheap … so again, every crisis is an opportunity for the aware and prepared.)
The point is that in terms of real assets like precious metals, real estate, and oil … there’s been a LOT of inflation.
It takes a lot more dollars to buy all those things.
Meanwhile, Bitcoin’s busted through $50,000, which has prompted assurances from the Fed that that dollar is not in trouble.
Call us cynical, but anytime the Fed feels it necessary to tell the market there’s no problem … there’s probably a problem.
So put your tinfoil hat on and in Part 2, we’ll take a trip down memory lane and see if history might shed some light on what’s REALLY happening today.
Hint: It starts with a weird 70’s word not used much until recently … stagflation.
Until next time … good investing!