Three Themes Coalescing
The comments below are an edited and abridged synopsis of an article by Crescat Capital
With unsustainable imbalances in the global economy and financial markets today, there are unprecedented opportunities to grow and protect capital in both the near and long term.
The three biggest macro imbalances and investing opportunities in the world today are a China credit collapse; a record overvalued US equity market top; and a flight to safety into undervalued gold, silver and precious metals miners. These three themes are coalescing in a likely financial market collision and Great Rotation.
Too many investment portfolios are over-weighted in extremely overvalued US growth stocks and FAAMG. Most are unprepared for a China monetary collapse or a US stock market downturn. Too few are positioned for the inevitable stagflation that models suggest is ahead.
The combination of already substantial rising inflation in the US along with a China credit collapse, just as the Fed is attempting to taper, is the catalyst for all three of the above themes to begin unfolding now. We are headed for a major shake-up in the world’s financial markets at a time of both historic global debt-to-GDP imbalances and record central bank money printing.
Up for discussion: A value approach; buy the dip in precious metals; China’s Mises Moment; US stock market top; gold wins whether as a safe-haven flight or inflation hedge; current inflation spike already rivals stagflationary 1973 and 1980; stagflation; gold launches as tech busts; gold stocks in the Great Depression; and Fed policy error.