The Roaring 20's Are Back
by Gerardo Del Real
It’s been a long year. Seven days into this year it is abundantly clear that the Fourth Turning I’ve often referenced will continue on its course undeterred.
If you’ve read the book and follow along you know we’re in for a sustained period of volatility that could last for years.
The most unpredictable year ended in the most predictable of ways.
President Trump signed another coronavirus relief bill. A bill he called a disgrace. An opinion that led to calls by Trump — and Democrats — for a $2,000 direct payment to most Americans instead of the $600 included in the bill.
The bill was pushed through despite lawmakers not having the time to read through it. A sign of the times and what I call the political bottom.
Democrats won both senate races in Georgia tipping the senate scales in their favor and we can now expect another relief/stimulus package (I lose track of the different names they come up with for the same thing). The only question now is how many trillions will be counterfeited.
Throw in a Fed that has promised low rates until at least 2023 and we have all the necessary ingredients for another roaring 20’s scenario. Prosperity for all? Of course not. That’s not how it’s designed.
The major U.S. indices will continue to make new record highs.
Bitcoin recently kissed the $40,000 level — it’s now larger in terms of market cap than all but seven public companies — and we’re even getting the uranium bull market I anticipated last year… And copper, and rare earths and gold, and real estate in low tax states.
If you haven’t noticed, there’s a bull market in just about anything you can trade your paper currency for.
Because there’s also a currency war happening. One that Australia has decided to get in on. The Reserve Bank of Australia (RBA) now owns 18% of assets to GDP and has increased its holdings in rapid fashion recently.
18% isn’t close to the 35% of assets the Fed owns.
Don’t get me going on Japan and the ECB.
All this matters because of how this ends. Increased wealth disparity, asset bubbles that disproportionately favor those with exposure to financial assets and the ability to transfer those assets to favorable tax jurisdictions.
But hey, enjoy your $600.
Or use it to your advantage. Capital will always flee to where it’s treated best and that flight has allowed for a historic opportunity in the commodity space. I don’t agree with the decimation of the middle class enabled by — and more recently perpetuated by — central bankers, but I sure in the heck plan on making money off of it.
Commodities are historically cheap relative to equities prices but not for long.
Inflation is here, the Bloomberg Commodities Index knows it as commodities just broke through 12-year resistance.
Copper knows it and is headed to $4/lb. Then $5.
Lithium prices are seeing their first sustained rise in three years.
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I recall back in 2005 when I purchased my first investment property. All I needed to get a loan for that property was a pulse and the willingness to take advantage of lenders’ greed.
It didn’t require me to be a real estate expert. Heck it didn’t even require me to come up with any money. It just required that I pay attention to the trend and make it work for me.
I sold that property two years or so ago for a tidy profit after years of collecting passive income from it. The profits from the property were my reward for getting in the game and exploiting the trend of cheap money, which translated into rising prices.
Inflation is here. The roaring 20’s are back for those paying attention and though we know how the story ends there’s a lot of runway between now and the eventual restructuring of the system.
Let's get it!
Gerardo Del Real
Editor, Resource Stock Digest
For the past decade, Gerardo Del Real has worked behind-the-scenes providing research, due diligence and advice to large institutional players, fund managers, newsletter writers and some of the most active high net worth investors in the resource space. Now, he is bringing his extensive experience to the public through Resource Stock Digest, Junior Resource Monthly, and Junior Resource Trader. For more about Gerardo, check out his editor page.
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