We were lucky enough to spend some time at the New Orleans Investment Conference, the longest-running investment conference in the United States.
In this episode, we chat with three expert guests. They share their expertise on all things investing, from cryptocurrencies to gold, the Federal Reserve to commercial real estate, the international oil market and the U.S. dollar.
Our guests touch on real-estate-specific issues, but they also give us the big picture about what’s going on in the financial space … and how that will affect investors of all types.
PLUS … our three guests have never before been featured on The Real Estate Guys™ show. Listen in to hear brand-new, timely insights from these money pros!
In this episode you’ll hear from:
- Your top-dollar host, Robert Helms
- His dollar-short co-host, Russell Gray
- The godfather of real estate, Bob Helms
- President of Neptune Global, Chris Blasi
- Author of Fed Up, Danielle DiMartino Booth
- Senior editor of the website International Man, Nick Giambruno
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Cryptocurrencies and precious metals, oh my!
Chris Blasi is an expert in all things money. He founded the precious metals exchange Neptune Global and has patented a new way to invest in metals.
We asked him to give us his insights on the cryptocurrency trend.
“Cryptocurrencies are all the rage,” he told us. That doesn’t mean they’re always the best choice.
Cryptocurrencies are digital currency backed by blockchain software. That means it is susceptible to the same issues as other software, like code issues, storage databases, and scaling.
Bitcoin is the big name in cryptocurrency right now, but there are hundreds of initial coin offerings, or ICOs, put on the market every day as people create new cryptocurrencies.
These cryptocurrencies have cost investors millions, Chris warns. “People need to step back and look at the market more closely” before making the jump to investing in cryptocurrencies, he says.
“Cryptos are actually a polar opposite of gold,” Chris says. Gold is a tangible asset, while cryptocurrencies are entirely digital.
That doesn’t mean he’s saying yay or nay to digital currencies … only cautioning investors to understand what they really are.
“Cryptos offer speculative gains,” he notes. “Do your homework and invest in moderation.”
Nick is actually an expert in gold … he developed a patented unit of trade for precious metals, the PMC ounce. It’s a unit of trade that corresponds to proportions of physical gold, silver, platinum, and palladium.
Using real-time technology, investors can buy and sell PMC ounces of metal immediately through Neptune Global.
The goal is to offer a turnkey precious metals fund … backed by real assets. And the PMC ounce has been architected to capture the blended return of each metal, smoothing out the volatility of trading in just gold or silver, for example.
Fed up with the Federal Reserve
Danielle DiMartino Booth has dipped her feet into all matters related to money. She has experience in private and public equities, worked as a finance journalist, and spent nine years at the Federal Reserve. She recently published the book Fed Up, her take on what’s wrong with the Federal Reserve.
We started by asking Danielle to give us an overview of the Federal Reserve.
The Fed is a quasi-public organization that is intended to function as the central bank of the United States.
Unlike some conservative politicians and finance experts, Danielle doesn’t want to abolish the Fed. She gave us her take on what we need to do to reform the Fed:
- Go from a dual mandate to a single mandate. The current Federal Reserve operates on a dual mandate of 1) protecting the value of our dollar and stabilizing prices and 2) maximizing employment. Danielle is in favor of completely dropping the labor mandate, which she believes would help keep both inflation and the value of the dollar in check.
- Reduce the number of local Federal Reserve banks from 12 to 10 and add a bank to the West Coast. In a largely cashless society, the need for so many districts has clearly dissipated, says Danielle.
- Hire knowledgeable people who represent regional economies. Get rid of the majority of the regulators in the Federal Reserve. Instead of hiring PhDs, hire people who actually understand the inner workings of the U.S. financial system. Give each district a permanent vote on the federal open market committee, and change the complexion of the Federal Reserve board so it’s composed of people who are actually on the receiving end of the policies the Fed makes.
Danielle is ridiculously knowledgeable about the Fed, but she also had a lot to say about real estate. We asked for her thoughts on the real estate market.
“Investors are missing the forest for the trees,” Danielle says. “I’m seeing the forest.”
Danielle notes that commercial buildings are overbuilt right now, and that abandoned B- and C-class malls and retail structures can only be repurposed for so long. That glut of overdeveloped, centrally located land will cause an oversupply problem, she says.
Another problem? “There are not enough low-cost homes.” We are facing a housing shortage that will only get worse in the next 20-30 years.
The people who benefit most from the overall real estate situation, Danielle says, are the people who are perceptive and get in while the fire is still burning and prices are at rock bottom.
The yuan, the petrodollar, and what it means for YOU
Nick Giambruno is a reporter and editor for Casey Research, specifically their International Man website.
We asked him about an intriguing article that appeared in the news for about a half second.
It’s about China’s hopes to price oil in the yuan (instead of the U.S. dollar) using a gold-based futures contract.
Why is this significant? Nick walked us through what this could mean.
If China is successful, “This will usher in a new era in the international monetary system,” says Nick.
A quick history lesson:
- In 1971, Nixon ends the Breton-Woods system; the dollar is no longer backed by gold
- To preserve the value of the dollar, Kissinger creates the petrodollar system, in which the U.S. government agrees to provide protection to Saudi Arabia in exchange for oil being priced in U.S. dollars
- The petrodollar system gives other countries an incentive to hold U.S. dollars
If China goes forward with its new money mechanism, it could divert 400-600 billion dollars in oil sales every year that would normally go through U.S. currency.
This could have a HUGE impact on international financial markets. Oil is the most valuable commodity in the world right now … essentially, Nick says, “China is going for the jugular of the U.S. financial system.”
How does the breakdown of the petrodollar concern you? “The breakdown of the petrodollar will have clear consequences for interest rates.” And as we all know, interest rates are the price of money.
We hope you learned something new from our expert guests! Now go out and make some equity happen!
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