China’s ready to launch …

On March 26th, the Chinese launch their yuan-denominated oil contracts. 

Is that a big deal? 

Some people think so.  Some say it’s just another incremental step towards a gradual shift in global economic power.  Some say it means nothing.

Most people have no idea it’s happening … and even if they do, have no idea if it has any impact on them.

But think about this …

If you pay attention and nothing happens, you’ll probably learn some things about the eco-system you invest in.  That’s not a big win, but it’s not a big lose.

But what if you don’t pay attention and something big happens? 

That’s what happened to all the people who downplayed sub-prime mortgage problems in 2007.  

So stick with us for a few minutes and we’ll share our reasons for thinking this is development worth paying attention to … 

… even if you’re a nose-to-the-grindstone real estate investor who doesn’t care what happens in stocks, bonds, currencies, or commodities.

In this case, we’re talking about oil … and in that regard, China’s kind of a big deal.  After all, China has surpassed the U.S. as the world’s largest importer of oil.  

That means China is the most important customer to countries who sell oil … including Russia, Saudi Arabia, Venezuela, Iraq, and Iran.  

Hmmm … Funny how the U.S. doesn’t get along with most of those folks, but that’s probably just coincidence, so put your tinfoil hat away.

The point is … China has leverage with major oil producers to pressure them to do business in yuan … and not U.S. dollars.

THAT’S why some say this latest development is important.

What’s the big deal? 

It starts back in August 1971 when President Richard Nixon shocked the world by defaulting on the gold-backing of the U.S. dollar.

That’s right.  Up until 1971, foreign holders of U.S. dollars could turn them into Uncle Sam and take home cold, hard gold.

The problem is the U.S. printed too many dollars and foreigners (being prodded by France) got worried … and started trading dollars in for gold.

And as demand for the dollar dropped, so did its value.

So then it took more dollars to buy the same things (inflation).  Gold went from $42 to $850, oil quadrupled, and consumer prices were rising double-digits.

It wasn’t as bad Venezuela today, but bad enough that Nixon prohibited private businesses from increasing prices or giving pay raises. 

Yes, that really happened in the land of the free.  It’s important to remember … governments do crazy things when they’re desperate.

Here’s where oil comes into the picture … 

To re-create global demand for dollars after they were no longer as good as gold, Uncle Sam made a deal with Saudi Arabia. 

At the time, the U.S. was the world’s No. 1 producer of oil.  Saudi Arabia was No. 2 and the de facto leader of OPEC, the Middle Eastern oil cartel founded in 1960.

In exchange for military support from the U.S., Saudi Arabia agreed to sell oil in dollars.  The other OPEC members tagged along. 

So now, if Germany, for example, wanted to buy oil from Saudi Arabia, they had to buy dollars first.  Even though the U.S. had nothing to do with the deal.

This created immediate global demand for dollars and the “petro-dollar” system was born … replacing the Bretton Woods “golddollar” system that Nixon defaulted on.

Many financial historians believe this was the single most important move the U.S. made to save the dollar.

Of course, other tactics were used, including jacking up interest rates and opening trade relations with China. But the petro-dollar system was (and is) a big deal and the focus of today’s discussion.

Oil’s not well with the dollar … 

Since the mid-70s, the petro-dollar system has been central to creating global demand for the dollar.  And the U.S. has been pretty protective of it.

But China’s been systematically cutting into that action. And the yuan-denominated oil contract is the latest, and perhaps most substantial step.

Of course, we’re just a couple real estate radio talk show hosts, so don’t take our word for it.  Here’s just a few of the MANY news reports …

China has grand ambitions to dethrone the dollar – CNBC October 24, 2017

China’s launch of ‘petro-yuan’ in two months sounds death knell for dollar’s dominance – RT, October 25, 2017

China Will Launch Yuan-Based Oil Futures Contract, Set to Shake Up Global Market – Fox Business News, December 20, 2017

China Set To Launch Yuan-Prices Oil Futures Next Month – Oilprice.com, February 9, 2018

Yes, we know many pundits and officials contend it’s no big deal.  But that doesn’t mean they’re right.

Here’s a couple of relatively recent examples of bad calls by two highly notable guys …

Bernanke Believes Housing Mess Contained – Forbes, May 17, 2007

Art Laffer bets Peter Schiff there won’t be a financial crisis – June 13, 2006

Funny today.  But not so funny if you were on the wrong end of the joke.

It’s good to have a Plan B … 

The dollar’s been falling for over 100 years, so it’s not the downward trend that freaks people out.  You can get rich simply by leveraging real assets with long term debt as the dollar falls.  That’s real estate investing economics 101.

The bigger concern is a sudden move, like when Nixon defaulted on the gold-backing.  Or when the subprime crisis suddenly seized up the entire financial system.

That’s like having a fire at your home or business.  It’s best to have a plan in place BEFORE the crisis … or you’re likely to panic, run in circles, and end up hurt.

That’s why we’re getting our big-brained friends in a room for a two-day mega-mastermind on April 6-7 we’re calling The Future of Money and Wealth.

We’ve got Robert Kiyosaki, Peter Schiff, Doug Duncan (chief economist for Fannie Mae), Chris Martenson, Brien Lundin, G. Edward Griffin, and MANY others …

We’re going to talk tax reform, the dollar, oil, gold, crypto, banking, and of course, real estate  

And most importantly … what an investor can do to prepare to avoid losses and reap big profits … and how to know what moves to make as things unfold. 

The future of money and wealth is changing … whether you’re paying attention or not.   But if you read this far, now you know.  

The big question is what to do next … 

There’s still time to join us in Fort Lauderdale April 6-7.  They might just be two of most important days of your year.

To your success!


More From The Real Estate Guys™…

The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.

High performance wisdom for the New Year …

Sometimes the most profound tidbits of wisdom are unexpectedly found in unlikely places.

Here’s a great one we picked up along the way …

“Most people figure it out … eventually.  The GREAT ones figure it out EARLY.”

We heard this during a casual conversation in the bleachers at a small college football game.  The subject was athletes, but it really applies to any endeavor … including real estate investing.

Most of us want to be great.  We want substantial success by whatever criteria we define it.  And we usually want it quickly … which brings us to our next profundity …

“More sooner is better.”

It all SEEMS so obvious.  But too often we find ourselves distracted and delayed with half-started projects, trivial pursuits; urgent, but unimportant tasks.

Meanwhile, minute by minute life speeds by … and we fall further behind.

But over time, we become more productive.  Through trial, error and pain we slowly learn to focus.  We gain skills and get more organized.  We learn when to say yes and when to say no … eventually.

But … the GREAT ones figure it out EARLY.

And when it comes to skills, organization, wisdom, discipline, and all the results those bring … more sooner is better.

Of course, this applies to ALL of life … including the business of real estate investing … so let’s think about HOW we can “figure it out” faster.

First, no matter how old you are, today is as young as you’ll ever be.  And no matter how young you are, it almost always seems life is too short.

So using today as ground zero, the goal is to figure it out early … and gain more (knowledge, wisdom, relationships, assets, cash flow, etc.) sooner.

Another lesson from athletics is learning to slow down and relax in order to go faster.

If you’ve ever been trained to sprint … or watched a slow-motion video of a world-class sprinter … you’ll see they’re very focused, relaxed, fluid … with no wasted motion.

Amateurs are tight … they try too hard … they’re inefficient … and they waste a lot of energy.  They work harder to go slower.

Sound familiar?  Sometimes the busiest people are the least productive.

Now here’s the next paradigm breaker … direct from furry green lips of Master Yoda in The Last Jedi 

“The greatest teacher, failure is.”

Of course, this doesn’t mean we seek failure.  Or does it?

While we don’t set out to do something intending to fail, whenever we attempt something we always run the RISK of failure.

So occasional failure is inevitable … especially when doing something new.

But just as you don’t have to save money in order to invest, because you can syndicate capital from people who’ve already saved it …

… you can syndicate wisdom from people who’ve already failed and gotten the lessons.

Or, as Bob Helms, the Godfather of real estate says …

“You don’t have to give natural childbirth to ideas.  You can adopt!”

 So we don’t seek out failure, but it’s not bad to seek out failures … people who’ve already failed and gained valuable wisdom through the process.

The key is to find the right people … and then get close enough to learn from them … and it’s about MUCH more than simply information.

It’s about culture.  It’s about the environment you’re in … the peer group you’re a part of … the ideas, attitudes, and opportunities you’re consistently exposed to.

As the new year rapidly approaches and you consider how to “figure it out” faster in 2018 … so you can get more sooner … take a strong look at your environment.

Do you have enough exposure to people who are pushing themselves through failure and are striving diligently to figure it out faster?

Are you as focused as you need to be to avoid resource-wasting distractions?

And perhaps most importantly, do you have a healthy attitude about your own failures … or do you let setbacks put you on the sideline too long?

Here’s more wisdom from brilliant minds … 

“Winners are not afraid of losing. But losers are. Failure is part of the process of success. People who avoid failure also avoid success.” – Robert Kiyosaki 

“I never see failure as failure, but only as a learning experience.” – Tom Hopkins

(By the way, both Robert and Tom will be with us again for our next sensational Investor Summit at Sea™)

Every year, in every economy, people find a way to win … and others find a way to lose.

And if both can happen in the same conditions, then the difference must be in how each individual behaves in the same environment.

Most of us are somewhere in the middle of the pack in whatever we’re working on … some folks are ahead of us, and some are behind.

In a marathon, each runner has to run their own race … but smart ones use the power of the pack to pick up the pace and pull them forward.  Sometimes it’s uncomfortable.

Of course, if it were easy then everyone would do it, and the achievement would be unremarkable.

“What is the point of being alive if you don’t at least try to do something remarkable?” – John Green

We hope you’ve had a successful 2017 and are eagerly looking forward to a remarkable 2018.

We appreciate having you in our audience and hope to see you very soon at a live event.

Until next time … good investing!


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The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.

Intoxicating investments can be toxic …

It’s the time of year to get together and have a good time celebrating the holidays.  Sometimes this involves indulging in some intoxicating activities.

Those who want to enjoy themselves know their limits … and prudently rely upon a sober person to get them safely home.

Naturally, we’re talking about investing.

Just take a look at just a few of the many recent intoxicating headlines …

It’s important to remember … investing vehicles are supposed to get us to our financial destination SAFELY.

Crashes are DANGEROUS … which is why sobriety is advised.

Of course, in a room full of intoxicated partiers, a sober person can come off as a party-pooper … and NO ONE likes a party-pooper.

So let’s see if we can serve up some investing eggnog and with a dash of optimism … and no nasty hangover or risking a life-threatening crash.

First, let’s take a quick dive into the aforementioned headlines …

Housing

Home-builders are REALLY confident … presumably because they believe conditions are ripe for them to buy land, materials, and labor … turn them all into homes which they can sell at a profit.

That’s because home prices are UP … unlike those dark days in the wake of the recession when existing homes were selling below replacement cost … making it nearly impossible for home builders to build profitably.

Stocks

The U.S. stock market … and most global stock markets … have been rocketing higher.

In fact, the U.S. stock market has taken out all-time highs … over SEVENTY times in 2017 … an all-time record.

All this amid rabid share buybacks by corporations flush with cheap cash from low interest rates… and now from tax breaks which appear inevitable in the new tax bill.

Of course, when corporations take stock OFF the market (reduce supply), while demand surges as bullish investors are piling in … prices rise.  Go stocks!

And speaking of rising prices …

Bitcoin

Of course, the meteoric rise of Bitcoin is THE asset price boom story of the year … perhaps of our lifetime.  It’s gotten to where accidental Bitcoin multi-millionaires are even starting hedge-funds.

Are we jealous?  Maybe just a lot.  But we’re not sure missing the Bitcoin boom makes us stupid … any more than Bitcoin billionaires are suddenly investing geniuses.

“Stupid is as stupid does.” – Forrest Gump

Pre-2008, we knew a lot of people who thought they were real estate investing geniuses because real estate was going up fast everywhere.

They’d put $20,000 down and buy a little house, and a year later it was worth $100,000 more.  There’s NOTHING wrong with that.

BUT … it’s a mistake to think you’re an investing genius because you bought a bubble asset at the right time.

Of course, if you’re not smart enough to get out before the bubble deflates, it can take all gains … and your investing “genius” … with it.  We know.

“I may be drunk, Miss … but in the morning, I will be sober … and you will still be ugly.” – Winston Churchill

Rising asset prices are FUN.  Easy equity is intoxicating.  Who doesn’t like to see the spread between assets and liabilities grow?

But asset price parties can turn ugly fast if you’re not careful, which brings us to the point of today’s musing …

In good times and bad, always remember what REAL investing and wealth are …

… and no matter how intoxicated with bubble wealth you are, be sure you get home safely.

How?

To our way of thinking, the purpose of investing is to accumulate units of real value and the productivity of others.

Wealth is measured by how many useful items you own … like buildings, trees, crops, barrels of oil, ounces of strategic or precious metals, etc.

These are things people MUST have in order to live, work, or make things of value.

When you have more units of real value, and more people sending you a portion of their productivity, you are WEALTHY.

And when you pick items of real value which also reduce exposure to counter-party risk, your wealth is even safer.

Intoxicated investors look at their balance sheet and celebrate their net worth … perhaps even borrowing heavily to spend on consumption.

In fact, this is EXACTLY what the government and banks WANT you to do.

Sober investors look at their balance sheet as merely a tool for building their CASH FLOW statement.  Spending comes out of the productivity of the asset … not it’s equity.

This is no small differentiation … because what you do with equity defines you as an investor.

The investor who buys low, sells high, skims some spending money, then pushes the stack back in and rolls the dice again, needs to keep playing the game … or the cash flow stops.

You can be a full-time investor, but you’re still on the treadmill.

The investor who buys low, then uses equity gains to acquire streams of positive cash flow will eventually become free from the need to personally produce to eat.

Robert Kiyosaki calls this “out of the rat race” … and it’s an enviable place to be.

The world is awash in paper (balance sheet) equity right now … in stocks, real estate, and now cryptos.  None of them are bad.  Equity is awesome!

But the market giveth equity … and the market taketh equity away.

We think it’s smart to take equity off the table before Mean Mr. Market takes it first … and then use your new equity to acquire productivity … cash flow.

It’s even better when you can pair equity with cheap long-term debt, so you can own MORE units of real value (properties) and income (tenants).

Of course, the right real estate is an ideal vehicle to acquire an income producing asset with cheap long term debt.

If prices decline, the income provides a basis of value and control.  And if prices take off, your bigger collection of assets will create even more equity faster.

If you haven’t already, now’s a good time for a portfolio sobriety check.  It doesn’t mean the party’s over … but it just might make it a bit safer.

Happy holiday and until next time … good investing!


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The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.

The MOST interesting story of the year …

What a wild ride 2017 has been … and 2018 is looking even MORE intriguing!

There’ve been SO many fascinating stories.  Trying to pick the MOST interesting is a real challenge …

… a historic and unorthodox Trump presidency

… the record-breaking ascent of the stock market

… the record-breaking U.S. and global debt

… the meteoric, hyperbolic rise of Bitcoin, and crypto-currency’s move from libertarian fringe to mainstream …

And of course, there’s the ongoing saga of China’s drive to dethrone King Dollar; the drama in the House of Saud; and the (allegedly) strong U.S. jobs market.

All these things affect the financial eco-system our real estate investments live in … so we pay attention to them.

After all, we don’t want our backs to the beach if a tsunami is coming.  We did that once and it was NOT fun.

So what’s the biggest story as we end 2017 and press into the new year?

We think it could be oil.  But perhaps not for the most obvious reasons.  Here’s why …

Currency is like the blood of an economy.  It circulates … transporting energy to individual cells … many of which are organized into vital functions.

We teach our syndication students the importance of designing an effective business model … a circulatory system … to be sure cash flows to all vital functions.

Failure to nourish all cells (individuals) and vital organs (critical activities conducted by groups of individuals) can result in sickness, permanent disability, or death.

This is true for individuals, for businesses, and for nations.

After World War II, the U.S. dollar was crowned the world’s reserve currency.

Backed by gold, the dollar circulated the globe … transporting economic energy to individuals, businesses, and nations.

In 1971, the gold-backing was removed, and the dollar became severely ill … with a disease called “distrustitis” … commonly known as rejection.  Nations didn’t want it.

So, they began aggressively trading in their dollars for gold …. bidding the price of gold up from $35 an ounce in late 1971 to nearly $700 in early 1980 …

Ironically, U.S. citizens were locked out of gold ownership until December 31, 1974 when President Gerald Ford revoked the ban imposed by President Franklin Roosevelt way back in 1933.So what does all this have to do with oil in 2017 … and why do we think it’s important heading into 2018? And how does any of this tie into real estate investing?  We’re getting there!

First, a little more history …

Uncle Sam discovered an un-backed dollar wasn’t very popular.  And when nations dumped dollars, it created The Great Inflation of the 1970s.

Back then, the cure for the dollar’s “distrustitis” was to force dollar demand through oil (the petro-dollar) and high interest rates (they reached 20% in 1980).

Cheap labor from China sucked up some inflation … while a recession slowed economic velocity to suck up even more.  But those are topics for another day.

The point is there’s a long linkage between the dollar, gold, and oil … and all three have substantial influence on geo-politics … even today.

Of course, now there’s a new kid in town … crypto (a.k.a. Bitcoin) … which started a ridiculous run in 2017 …

Interesting Image

 

Hmmmm … that chart pattern for 2017 looks a lot like when gold took off the last two times there were outbreaks of dollar distrustitis …

Probably just a coincidence.

But it makes you wonder if crypto and oil might get together as a way for Uncle Sam’s adversaries to escape the dollar … oh, wait …

Headline:  Russia may turn to cryptocurrencies in oil trade to challenge sanctions & the petrodollar

Headline:  Venezuela to Launch Oil-Backed Cryptocurrency

… which brings us to why we’re closely watching oil going into 2018.

In many ways, oil is the asset of choice to back currency.  It’s been the backbone of the dollar since the 1970s and the world knows it.

That’s because the world runs on oil.

And unlike gold, every productive nation MUST have oil.  It isn’t a philosophical commodity … it’s pragmatic.

As Investor Summit at Sea™ faculty member Chris Martenson reminds us, EVERY economy needs energy to operate.

Because oil is the world’s most in-demand commodity, whatever currency it trades in is sure to be in high demand.

China, the world’s #1 buyer of oil, knows this.  And they’re using their economic muscle to position their currency, the yuan, for a greater role in global trade …

Headline:  China will ‘compel’ Saudi Arabia to trade oil in yuan — and that’s going to affect the US dollar

Of course, with $20 trillion in debt and a debt-to-GDP ratio over 100% … more than THREE times what it was when high interest rates were used to crush inflation …

… the U.S. economy probably couldn’t handle 10% interest rates, much less 20%.

So if all the forces aligned against the petro-dollar succeed, might the U.S. experience some painful inflation?

Quite possibly.

Of course, when you own real assets … especially those which produce (like farmland or oil fields) … or channel productivity (like rental real estate) … you’re hedged … you preserve wealth.

But the key to PROFITING from inflation is to short the dollar.  And that’s done with debt.

When you can fix the debt and own the asset, as the asset’s dollar price goes up against the fixed debt, the debt becomes smaller.

Of course, as we’ve discussed before, income-producing real estate is the safest way to play this game.

Now if we’re Uncle Sam and worried oil might end up backing a rival currency, we need to prepare for role reversal.

When the world wants dollars, all Uncle Sam had to do is print and import.  The world gets dollars, and the U.S. gets stuff.  Nice.

But if something replaces the dollar, then Uncle Sam needs to export stuff the world wants, in exchange for whatever currency is now in demand.

Are we saying the world will stop taking U.S. dollars?  No.

But they might want a lot MORE dollars to buy the same stuff (inflation), which would weaken the U.S. economy.

Not surprisingly, the U.S. is taking steps to stimulate domestic oil production.

HeadlineThe GOP Tax Bill Is A Big Win For U.S. Oil And Gas

And agree with it or not, the Trump Administration is very friendly towards the oil industry.

Bringing this all back to Main Street and our daily real estate investing …

First, the relationship between oil and the U.S. dollar has the potential to impact the purchasing power of our dollars, interest rates on our mortgages, and the cost of living for our tenants.

We’re very interested in ALL those things.

Next, if Uncle Sam stimulates domestic energy production with investment incentives and regulatory easing, it might lead to economic booms in energy-rich geographies.

Remember, energy was a top driver of job creation post-2008 … with Texas being the biggest winner.

That’s what took us into Dallas after the recession … and keeps us interested today.

Oil, gold, the dollar, China, new faces on the Fed, tax reform, Bitcoin …

… are all converging in 2018 for potentially massive changes to the future of money and wealth.

And they’ll all be very important topics of discussion on our 2018 Investor Summit at Sea™ … which just might be the MOST important Summit in our history.

Until next time … good investing!


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The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.

Dollar death watch emergency conference call …

We just recorded an emergency conference call

 featuring Peak Prosperity’s Chris Martenson (The Crash Course) and Brien Lundin (Gold Newsletter).

Chris is a big brain PhD who studies economics, eco-politics, and how energy (i.e., oil) affects economics.

Brien is a well-recognized expert in precious metals and mining investing … and spends much of his time studying the gold market.

Both guys are hyper-connected to the smartest economists, investors, and niche experts in the world.  So they’re not just smart, they’re also well-informed.

The conference call centers around China’s recent announcement of plans to back their currency with gold for the purpose of settling oil trade.

This single move could substantially affect oil, gold, the dollar, interest rates, real estate … Uncle Sam’s credit line, budget and influence around the world … and YOUR financial future.

It’s a BIG deal.

China has been advancing … quietly at first, and lately much more overtly … a strategy to UNDERMINE the U.S. dollar as the world’s reserve currency.

This is HUGE for anyone measuring wealth and income in U.S. dollars.

It’s even more significant for Americans, whose government has been able to use its privileged status to go DEEPLY into debt … seemingly without consequence.

But that could be changing …

Uncle Sam’s unlimited checkbook … as well as his substantial influence around the world … has been largely built on the power of issuing the world’s reserve currency.

That’s because international trade is primarily settled in U.S. dollars, so getting locked out of dollars though U.S. sanctions can choke a nation’s economy …

… just ask Russia, Iran and Venezuela … to name a few who’ve been on the receiving end of this power.

Oil is the biggest component of international trade.

It’s no wonder Russia, who happens to be the world’s largest oil producer, was early to sign on to circumvent the dollar.

Iran (#5 producer) is on the team.  Venezuela (#11 producer), whose economy is 95% oil, also just got on board.

Now the U.S. is talking about kicking CHINA out of the dollar system.

But China’s been preparing to be independent of the dollar

… and has a LONG list of bilateral trade agreements signed with MANY trading partners (as chronicled in this free report on Real Asset Investing).

As the largest oil importer in the world, China has a lot of purchasing power to put pressure on the “petro-dollar” (U.S. dollars used in international trading of oil), as Chris explains in the call.

The petro-dollar has been a major component of the dollar’s power in international trade.  China’s move could be setting the table for a collapse of the petro-dollar.

This isn’t the end of the world …

But it could be a BIG change for dollar denominated investors …  

Those who are aware and prepared can protect themselves and get in a position to win.  Those who aren’t will likely be blind-sided and face potentially horrific losses.

We’ve been watching this develop for years … and now it seems things are picking up speed.

If YOU haven’t been paying attention, it’s time to accelerate YOUR learning and preparation.

Maybe this isn’t as big a deal as we think.  But better to prepared and not have a dollar crisis … than to have one and not be prepared.

The GREAT news is there are lots of smart investors watching this situation very carefully … and there are strategies to hedge … and even profit … from these developments.

So click here now to listen in on the conversation with Chris Martenson and Brien Lundin … as we discuss China, oil, gold, the future of the dollar … and how concerned investors can prepare.

Until next time … good investing!


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The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training and resources to help real estate investors succeed.

Yet another BRUTAL storm forming …

And the hits just keep on coming …

We know you’d like investing to be simple and drama free.  We do too.

But while real estate investing itself is a simple activity … the economics of real estate investing has become more complex.

There’s a LOT going on in the world.   Some things interconnect by cause, and others by effect … meaning they don’t appear to be related, but then converge.

As Jim Rickards points out repeatedly … economies and ecologies are complex systems.  They are difficult to understand and even more difficult to predict.

But even though no one can say with certainty what will happen, it’s still important to take precautions when it’s clear SOMETHING BIG is coming …

… just as Floridians watched Irma and prepared, not knowing fully what to expect.  Better to be prepared and not have a disaster than vice versa.

So let’s take a look at what’s forming on the horizon …

Hurricanes Harvey and Irma

While the total financial and human impact of these back-to-back disasters is yet to be calculated, one thing’s for sure …  it’s going to be expensive.

Short term disruptions to gas prices and orange futures aside, disasters like these redirect HUGE amounts of capital … which has a ripple effect.

For example, money insurance companies might otherwise put into financing NEW multi-family apartments in other markets …

… will now pour into re-building properties damaged and destroyed in Houston and Florida.

Federal money which might have been focused on infrastructure spending or tax cuts will also be redirected to damage recovery.

And it’s likely the demand for construction labor and supplies will rise, driving up total construction costs in many markets … not just those affected by the storms.

That’s because just as demand for concrete in China creates price increases in the U.S. … the demand for reconstruction resources will probably be felt throughout the United States.

Distressed inventory

Just like the financial disaster of 2008, there may be many problem properties coming out of all this … because many weren’t insured for flood damage.

Federal aid may help some of those homeowners.  It’s less likely such relief is offered to investors who were under-insured.

While it’s no fun to profit from someone else’s loss, there’s a role for profit-seeking capital to play in repairing damaged communities.

We wouldn’t be surprised to see tax breaks, loan subsidies or other incentives offered to entice investment capital to flow into affected markets … like when New Orleans was hit by Hurricane Katrina.

The Debt Ceiling  

In other news, President Trump and Congress managed to get the debt ceiling temporarily increased … while raising the prospect of simply eliminating it all together.

Talk about calling a spade a spade.  The ceiling hasn’t capped spending … ever.

Now billions of dollars are ear-marked for hurricane relief, and everyone can take a short break from “worrying” Uncle Sam might default on his debt.

So it looks like it’s back to over-spending as usual. Not surprisingly, the dollar’s year-long fall has resumed velocity.  

Then again … maybe the dollar’s fall (and gold’s rise) is part of a bigger story which has nothing to do with U.S. business-as-usual deficit spending …

Gold-backed yuan already finding friends

As we recently noted, China announced plans to settle its oil trade in yuan.

And to entice sellers to accept yuan, the Chinese are backing it with that “barbarous relic” … gold.

Days later, oil-rich Venezuela announced they’d start using yuan … and other currencies … to “free us from the dollar.”

It’s no surprise Venezuela would jump at this.  After all, just two weeks earlier President Trump signed an executive order sanctioning Venezuela … whose economy is 95% oil.

But as we note in our Real Asset Investing report, China began its plan to supplant the dollar way back in 2010.  So none of this is new.

And the first country to sign a bilateral trade agreement to “renounce the U.S. dollar” was … wait for it … Russia … followed by Brazil, Australia, and a LONG list of others.

We think this is a HUGE story that few in mainstream financial media are covering.  But we are.

In fact, we’re putting together an emergency conference call with Brien Lundin and Chris Martenson to discuss the ramifications … so stay tuned for that!

Is the U.S. dollar doomed?

This is the big WHY IT MATTERS … especially for Americans and everyone denominating wealth in American dollars.

Like Hurricane Irma, no one can say exactly if, when, or how disaster will strike.  And it’s possible the winds will change and the storm will miss your portfolio.

But what if it doesn’t?  Right now, the winds appear to be headed your way.

Are YOU ready?  Are you getting ready?  Many people don’t even know what ready looks like.  That was us 10 years ago.

It’s a complex problem so there’s no simple solution.  If there was, it probably wouldn’t be a problem.

Peter Schiff has been warning about this for years. As has Robert Kiyosaki, Richard Duncan, Simon Black, Chris Martenson, Jim Rickards, David Stockman … and the list goes on and on.

Each has their own ideas about when … and how to prepare.

There’s no one-size-fits all answer because everyone’s situation, portfolio, investing IQ, advisory network, access to deals, and investment objectives are different.

MISSION: POSSIBLE

Your mission, should you choose to accept it, is to get informed, educated, connected and activated … as quickly as possible.

And if you think getting educated is time consuming and expensive … it’s nothing compared to being ignorant and apathetic.

When storm clouds form on the horizon, some decide to pay attention and take pre-emptive steps.  There’s no guarantee of safety, but their odds are better.

Others only hope for the best, but don’t prepare for the worst.  Yet the higher the stakes, the more important it is to be preemptively cautious.

The storm warnings are loud and clear … for everyone paying attention.

But storms often approach slowly … and because most blow over … it’s easy (yet dangerous) to assume every storm will.

Slowly at first … then all at once

Longtime listeners know we’ve been watching this whole story unfold for years.

We talked about the very real possibility of China making a run at reserve currency status almost two years ago.  We said then we’d keep you informed and so we are.

Now things are picking up speed.  So if you’re new or haven’t been all that interested … NOW is the time to accelerate your understanding.

If you’ve read this far, we trust you’re interested and concerned … as you should be.

So we STRONGLY encourage you to SERIOUSLY consider attending BOTH Brien Lundin’s New Orleans Investment Conference (coming up FAST!) and The Real Estate Guys™ 2018 Investor Summit at Sea™.

These events each feature lots of big brains … with critical perspectives every serious investor needs to have to help understand and navigate these stormy times.

Sure, these events are capitalist ventures … we each make some money producing them.

But we’re not after your money … we simply use to it for event costs and to pay some bills along the way.  Your support makes these events possible.

We organize events so we can get brilliant minds in one place at one time.  And the only way to make it affordable for us … and you … is to share the cost with hundreds of others.

So yes, we need your help.  And in exchange YOU get access too!

With that said, these events are happening with or without you. Your absence or presence, while nice for us, could be LIFE-CHANGING for YOU … and that’s true of most important ideas, opportunities and relationships.

So with the winds of sea change blowing fiercely on the horizon, it’s a good time to consider carefully whether or not investing in preparation is a good idea.

We think it is.

Until next time … good investing!


 More From The Real Estate Guys™…

The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training and resources to help real estate investors succeed.

China, gold, oil, the dollar and YOU …

There’s a BIG story developing … something we’ve been tracking for years …

… which might be about to create a SEA CHANGE for investors all over the world … including YOU.

Here’s a headline you SHOULD be aware of but might have missed …

China sees new world order with oil benchmark backed by gold – Nikkei Asian Review, September 1, 2017 

There’s SO much to say here, it’s hard to know where to start.

We’ll hit some highlights … and refer you back to some of our previous coverage of this VERY important topic.

First, let’s quickly consider …

WHY this matters to real estate investors … 

If you denominate your net worth, assets, debt, or income in U.S. dollars, then you should care VERY MUCH about the future and health of the dollar.

Ditto if you utilize debt or care about the impact of interest rates (and you should) … on your mortgages, the stock and bond markets, as well as the overall economy.

And if you’re an American or invest solely in the U.S., the health of the U.S. dollar and economy should be of even GREATER interest to you.

So yes, what China is doing with gold and oil matters a LOT to real estate investors … especially in the United States.

What’s the big deal?

First, this recent move by China is the latest in a long series of moves they’ve been making to undermine the role of the U.S. dollar as the world’s reserve currency.

This is something we’ve been tracking since 2009, when we first read about China’s concerns about U.S. debt and interest rate policy.

We continued to track China’s actions and made this the focus of our remarks in our 2013 presentation at the New Orleans Investment Conference.

Shortly thereafter, we expanded on the situation in our special report on Real Asset Investing.

We’ve also talked about it on our radio show and in our blog.

So if you’re new to this whole subject, we recommend you go back and review those reports, broadcasts and blogs.

For now, just understand China has been overtly, aggressively and systematically working to undermine the U.S. dollar’s uniquely powerful role in global finance.

This latest move is a HUGE next step in unseating the dollar’s dominance.

The rise and (potential) fall of the U.S. dollar …

If you’re unfamiliar with U.S. dollar history, schedule some time to study it.  It’s too big a topic to unpack here.

For now, we’ll simply point out that the U.S. dollar was originally backed by gold from its inception and when it ascended into its role as the world’s reserve currency at Bretton Woods in 1944.

The gold backing was broken in August 1971 when then-U.S. president Richard Nixon defaulted on Bretton Woods.  Gold soared and the dollar crashed.

The U.S. quickly cut a deal with Saudi Arabia … where the Saudis would use their influence to force oil shipments to be settled in U.S. dollars.

This “petro-dollar” deal created a huge and persistent demand for dollars …

… and protecting the petro-dollar has been a focus of U.S. foreign and trade policy ever since.

To further bolster the dollar, then-Fed chair Paul Volcker jacked-up interest rates to over 20%, which had a profound impact on the U.S. economy … and real estate.

All this to say … gold, oil, the dollar, and interest rates all impact each other … and have been VERY important to maintaining U.S. dominance around the world.

So it’s no surprise other countries looking to increase their influence in the world are interested in all those things … and you probably should be as well.

Chinese currency to be backed by gold …

So let’s take a look at some of the notable statements in the news article …

“Yuan-denominated contact will let exporters circumvent US dollar
“Yuan-denominated gold futures have been traded on the Shanghai Gold exchange as part of the country’s effort to reduce the pricing power of the U.S. dollar

“China is expected shortly to launch a crude oil futures contract priced in yuan and convertible into gold … could be a game-changer for the industry.”

“… will allow exporters such as Russia and Iran to circumvent U.S. sanctions …”

“… China says the yuan will be fully convertible into gold in exchanges in Shanghai and Honk Kong.”

Think about this …

When oil exporters … like Iran, Russia and Venezuela… can circumvent the U.S. dollar in oil trade … and get GOLD instead of U.S. paper which can be printed out of thin air …

…which do YOU think they’ll choose?

And how influential will U.S. sanctions be (i.e., getting locked out of the U.S. dollar and banking system) when countries can do business without the dollar?

How important will GOLD become as more and more international trade settles in gold-backed yuan instead of nothing-backed dollars?

How unimportant will dollars become?  Where will the bid move?

Is THIS why gold has been moving up lately?  Is this why the dollar has been falling?

Why did U.S. Treasury Secretary Mnuchin pay “a rare official visit” to Fort Knox and subsequently tweet, “Glad gold is safe!”?  All of the sudden gold is interesting to the Treasury?

Meanwhile, Germany recently completed a repatriation of a big chunk of their gold … ahead of schedule.  Maybe the rush is to pacify voters in the upcoming election … or maybe there’s another reason?

Of course, way back when China began publicly expressing concerns about the U.S. dollar … and taking steps to mitigate its own exposure to dollar denominated assets …

… several countries joined Germany in taking steps to repatriate their gold from foreign hands.  That feels a lot like a “run” on the bank … and it began long before any of the current elections.

Besides, if gold is really just a barbarous relic with no role in modern finance as some claim … then why all the fuss?

As you can see, this all raises a LOT of questions. 

What’s an investor to do?

First, simply understand the fate of the dollar has a PROFOUND impact on anyone who earns, saves, invests or borrows in dollars.

If that’s you, then this is an IMPORTANT topic for YOU to pay attention to.

Next, be encouraged there are investment strategies which you can use to mitigate risk and generate profits … even in the face of a falling dollar.

We discuss some of these in our special report on Real Asset Investing.

Get and stay connected and informed.  That’s why we attend the New Orleans Investment Conference and produce the Investor Summit at Sea.

Right now, it’s more important than EVER to attend events like these.

It’s where you hear from thought leaders, focus deeply on important topics, get into great conversations with like-minded people and subject matter experts …

… and form valuable relationships with people who can help you implement useful strategies.

The WORST thing you can do is ignore it all and hope nothing’s going to change. The world is changing whether you know it, like it, or understand it.

How you choose to respond will determine how it changes for you.

Until next time … good investing!


 More From The Real Estate Guys™…

The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training and resources to help real estate investors succeed.