The 1970's Are Just starting- We Told You Before

For What it is Worth

 

This is the 1970's all over again

Nothing has changed. The Dollar will stay strong because Trump says so. And it helps orchestrate the biggest short squeeze ever. Emerging markets will be long dollars when the greenback finally starts its descent. The US and China will laugh it off. US citizens will be deciding on hot dogs or cat food again as inflation kills their buying power. We will be forced to buy American because it is cheaper. But it will be crap product again because the raw materials will be more expensive to import.

 

Gold Folds for Now

Even our recent technical signal last week to buy a bounce failed.

If we personally are looking to short Gold under $1169 for a quick buck, then that means we are either

  1. not selling here or
  2. short under $1172-$1169 and will have to cover above $1272

For us the better long trade would be if we

  1. sold Gold under $1169.
  2. Then we were stopped out and reversed above $1272.

The dream would be that another non-confirmation RSI would then appear. But these are momentum trades.

The Chart Warned you- Read #2

That means a rounding bottom will likely be needed before the next sustainable rally. The technical levels were spot on. The numbers are what they are. Bullish above, bearish below.  When everything else has peaked, Gold will rally in a most vengeful manner. In the meantime, Gold will be a slave to the USD. Silver will not be as much.

 

Grow Up

We are disgusted with Goldbugs who need constant bullish affirmations and hand holding. Cry if you want. The macro is valid. Everything else is a trade. Are we pissed? Yes. Because we didn't short the market under our level. Be happy your stocks are going up. Then sell them adn buy gold cheaper. Its a 5 year investment from here. It's a 2 day trade. Here it is again from November.

 

Bonds First, Gold Last to the Inflation Party?

You have to be nuts to sell Gold as a part of your portfolio. If you have the proper allocation of Gold to stocks, then last week should have been a good week for you. Speculation is a different story. But when stocks go up and Gold goes down, be happy. Bonds? In a normative market, Bonds predict, Stocks predict less so, industrial commodities react in real time, and Gold lags.

Bonds are discounting 2 years down the road again. That is because the government is not going to be manipulating them with QE we feel. That is your compass to know that gold will do well in the future. The key for you as an investor is to keep rebalancing your portfolio as stocks rise and Gold drops. FTA- Trump to Make Debt Great Again

 

Trump Will Make the Military Great(er) Again

Manufacturing and infrastructure wont be "shovel ready" until 2019. The only thing "shovel ready" now is military spending. Watch as Trump channels Reagan in this way. 

 

The Inflationary Path Forward

When it comes: Real estate will not save you, stocks will not save you, Bonds will kill you. Only dollar denominated assets will save you. Stocks will have already discounted inflation and go sideways to lower in the next 3 years.

 

Rebalance Percentages

Keep selling stocks in a rally and buying gold to maintain a 5-10% notional Gold portion on your investments. Stop whining about the price of Gold. It is not a religion. It is a hedge. And it is key to wealth preservation

 

Your Home is Not a Piggy Bank

Real estate will not help this time. The bank will not give you money to spend on loan. Rates will go up. Equity level demands by banks will be higher than before. And if that doesn't stop them, a "windfall tax" will be instituted to slow down the velocity of money.

Empty nester in the suburbs? MOVE to the city while you can. Cash in. There will be no new suburban housing demand from millennials. Boomers will have no-one to sell to. Last one out is condemned to suburban poverty.

 

Europe is Our Future

in Europe the poor live in suburbs, and the affluent live in cities. This is in part because their society is older than ours. Heed it. We are on that path now. The uber-rich  in Greenwich will move to Nevis. The rich will move to Florida. There will be noone to buy their Mc Mansions.

Suburban taxes will go up to compensate for subsidies for inner city rebuilding.

 

New Jersey Suburbs will become Slums. 

NJ is a democrat state that derives its income from progressive taxes; Specifically high income tax. How else do you think gasoline is so cheap in NJ? Because of high income tax. When Jon Bon Jovi moves, it is over. Short Middletown, buy Camden 

They are already talking about regressive taxes on Gasoline. That is the kiss of death. Look it up.

 

The Family of 27 Next Door in CT

CT is a regressive state in taxes. The Fairfield County area is GOP all the way. Low income tax and high sales tax. Gas prices are higher. This offsets the low income tax, attracts the rich, and keeps out the poor who cant afford $4.00 gas.

But, when a family of 27  hard working Guatemalans moves in next door to you in CT looking to survive on cutting people's lawns: you will know we are right then. And it will be too late for you. Your home tax Mill rates will be higher to subsidize the next industry getting tax abatements to move there. Thank Malloy for that.  UBS, RBS, NBC, Bridgewater, etc.

 

Finally

Just Saying. Nothing has played out differently since we first made our macro assessment  on November 15th. Keep your trading powder dry. By definition, if you are not buying Gold here, you are bearish or overextended long.

 

Remember our community rules

19 comments sorted by

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Anonymous (not verified)

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I strongly 100% disagree with this statement: "Empty nester in the suburbs? MOVE to the city while you can. Cash in. There will be no new suburban housing demand from millennials. Boomers will have no-one to sell to. Last one out is condemned to suburban poverty." **My Take: Nobody gives a crap about millenials. They are dumb, still living in mommy's basement until they turn 35 and have no credit to buy any house cause they are strapped with the college loan scam for decaades. Retirees sure get out of the Burbs, but you need to Move as far away from any major city, as they will turn into Death Traps. Cities are bankrupt and loaded down with Billions in debt with pension funds less than half funded, which means if you live in the cities, your property taxes will skyrocket to make up for the Cities Mismanagement and Unions. Go find a nice slice of property in the country, cheap property taxes, $100 per acre per year. $500 for 5 country acres homestead off the Grid. Pay cash for everything as the cost of living is amazingly cheap. Fresh air, healthy lifestyle, work your garden and enjoy all the nature, you will never see in the polluted cities riddled with crime and massive debts. I think this article writer is a RE Agent in the city. Cause there is no reasons what so ever to spend your retirement funding the Cities Mismanagement. They are looking for a Bail out, Don't be duped. Go fund your self retirement living in peace and quiet out in the Country.
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Mike Hunt (not verified)

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In your articles, previous and most recent, your opinion seems at times somewhat logical and obvious. However i find opinion to be like assholes... everyone has one, and they all stink ! I too may write a blog !
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rroyston (not verified)

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do exactly the opposite of what you think, unless you've been a winner all your life.
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Bobs your uncle (not verified)

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The first part, meh... the second part, you are correct. The millennials do not want to live in the 'burbs.' They won't have (many) cars, either (why the average age of getting a drivers license is up to almost 24). The concept of 'suburbia' is what destroyed the great American metropolis'. One of the most important differences I noticed while living in Europe for nearly a decade was their reinvestment into the city centers. It keeps the vitality high and crime rates low. Suburbia has also caused racial and financial divisiveness. Interestingly, look at Detroit as an example. The city center is booming, full of man-buns and beards, new hip restaurants and bars. Apartments are now more expensive per square foot than Chicago. The first ring of the suburbs, on the other hand, even the police will not go there. I agree with your thesis that the Boomers will have McMansions that no one will want to buy. Its just not cool anymore to live out in the 'burbs,' driving that far to the office.
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timzmny (not verified)

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In England rat pie used to be a favorite of the working class. not to worry after Trump creats all the jobs he says the unemploymet level will be 2%. There will be jobs for the 3 million homeless, and they can let people out of jail to find jobs. We can also open the border to Mexico for workers.
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Chuck84324 (not verified)

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Can't compare European cities to US ghetto cities. When the SHTF in a US city, the police will be scarce, stores looted, home invasions for food rampant. Unless you know a good recipe for cooking rat meat, stick with the suburbs.
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Peter Dykes (not verified)

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Your call on silver was outstanding.....ly awful.
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Fred Astaire (not verified)

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Comparing city dwelling to suburban or country living is like comparing chalk to cheese.
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Peter Dykes (not verified)

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Why would you expect kudos if you have boo-booed so badly in your call?
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Sure Billy (not verified)

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Post your book for all 2 C
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Richard Gilbert (not verified)

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I haven't heard from Peter Schiff in a while.
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scuba415 (not verified)

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I am an overextended gold long, though I have not cried about it (at least not publicly). Question: If a 70's style inflationary scenario plays out, although to me it seems a much more extreme version is likely to, how will 5-10% of assets in gold be enough protection when everything else is getting killed? Seems to me that would just mitigate some of the damage, but not keep one whole.
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Anonymous (not verified)

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Why would anyone want to live in the city when all the rioting and crime and what have you will be in the cities. I'm just saying........
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Anonymous (not verified)

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harry dent may have been right about gold under 1000... time to load up the trucks...
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A non native Gu... (not verified)

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Hey Soren K. How do I follow you? Everything that you are writing is very logical and researched. Larger corporations are locating / (re)locating to cities and real estate is becoming ridiculous as a result. At least in Seattle... it is done to retain talent since being in the city is seen as a competitive advantage. It is funny you reference Guatemala / Europe in this article... my family (from Seattle) now resides in Guatemala and we are on holiday in Europe. You are spot on about the poor / lower middle class in the suburbs and the middle-upper to rich in the cities. We have seen that first hand in the UK / Austria as we travel through the suburbs. I will say that the suburbs in Guatemala City are still a good investment for now... I cannot say the same for the states.
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Some Guy (not verified)

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Not sure if I agree. Guatemala and its people are beautiful, but Guatemala City is one spooky place to be. Maybe it's okay if you are in a gated community, but I wouldn't just jump in a tuk tuk and go into town for an afternoon.
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dennis smith (not verified)

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This is similiar to the seventies but not even close even to the early seventies.There was plenty of americans to fill the working force and there was little debt held by depression era generation used to knowing what hard time were about. However I get your point just nothing is settled yet. When Trump assumes the throne we shall see. Interest rates are creeping because of war threat.This is much more like the 20s going into the 30s from my infomation from people who lived it. But they know that. They being the bankers.If you don't want a depression you settle for a hyperinflation which is much worse and a threat to the country by law enforcement in fear. Not there yet. You well know when we are. Difference from the rest of the world is only the constitution that we hold as as a people versus other countries.The people in the USA are armed to the teeth.With a lot of vicious small semi automatics and full automatics from guess who. Their favorite beloved neocon brothers. Yep and the more the merrier. No offence but foriegners would not like a civil war here.They would be broke after shipping all their hardware over. Only thing that could defeat us would be for the military to defect to another country.
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H Grossman (not verified)

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Interesting and worthwhile article.
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Soren K.

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tired of the BS . expect more hate mail than kudos. so tx! lots of real estate research coming up to corroborate things. scary