A Credit Implosion Is Coming
The biggest bubble of all is bursting—the bond market, where companies and the government borrow money—and it’s twice as big as the stock market.
Institutional investors are starting to shy away from bonds and will look elsewhere for safety. Retail investors, who are normally bullish when they shouldn’t be and bearish near bottoms, are quitting gold investments just as the major miners are reporting profits for the first time in years. These are contrarian playbook situations that are coming into fruition.
The smart money is buying gold as the Fed raises rates, since it knows that real interest rates remain close to zero, and it also knows that the Chinese are gobbling up gold.
Three-Part Investment Theme:
- Protection: If you haven’t already bought gold or silver coins and bullion, or allocated funds into protective instruments, it is time to start, as the US government enters the summer with a debt ceiling debate that might get heated up and send the market into mayhem.
- Inflation and infrastructure: Consider owning shares of cobalt stocks, which can certainly become top performers in the coming months.
- Contrarian gold stocks: These are literally the most hated investments today, and are therefore one of the cheapest.
It requires guts and stamina to be part of the party after you’ve seen a number of funerals, but that’s exactly how people become multimillionaires.