By Soren K. and Vince Lanci
As you have taken the time to read this post, and we have taken the time to write it, we should be frank. The world hates Gold bugs. The world always has and always will. “Why?” Is the question of the non-affiliated.* Stop asking it.
This is Inflation. Right here, Right now
Nothing has made sense. Fundamentals are useless. Active management is devalued. Stocks go up on bad news, and up on good news. Correlation Lock is on the horizon again. Here is something that finally makes sense.
- Fact 1:The UK has the best-performing major equity market this year 12.08%
- Fact 2: In constant-currency terms, it's the worst-performing. GBP/USD=-16.67%
FTSE 100 Performance
YTD Return: 12.08%
Pound Sterling Performance
YTD Return: -16.67%
It's Not About GBP vs USD
Constant currency means: “Pick any currency, just use the same one.” This is the effect of currency debasement. This is inflation. Right here, right now. Are there other factors to be considered like Sector make-up? Sure. We've looked enough. The pursuit of objectivity remains core to our analysis.
Good news: UK has best-performing major equity market this year. Bad news: in constant-currency terms, it is the worst-performing.— James Mackintosh (@jmackin2) October 8, 2016
Model your Portfolio Risk
Our only advice is to makes sure you own physical assets in appropriate quantity to offset the shortfall of the FTSE in Constant Currency terms, since the UK is our only data point so far.Examples include real estate, precious metals, art, and other real objects. All have risks associated with them. Like liquidity, portability, and confiscation to name a few.
The Message is for You, the Reasonable Person.
We are tired of explaining ourselves to people who do not wish to hear. Global leaders have either drunk the Keynesian kool-aid or worse, they have an agenda financed by multi-national corporations.
We are equally tired of seeking recognition from the voices of the converted. Peter Schiff doesn't need reminding. Eric Sprott doesn't. Jim Rickards does not. They are in business for themselves. All we seek here is to give solace to those who belong to no monetary religion. UK stock market returns did not compensate for the weaker British Pound.
Bitter Clingers of Globalism and Fiat
The New Cultists are the ones who blindly, dogmatically, believe in the power of governments to fix things. They believe they can be objective in their doing what is best for us poor ignorant “bitter clingers”. They are simply in the majority and feel safe. They are not. h/t to "No one" in comments for the idea
The Neo-Keynesian Endgame is Inflation
The endgame is inflation, and we have held that belief for some time. Governments are petrified of deflation, and that is not a criticism. Our contention has been that market intervention only really succeeds in the direction of the macro trend. And that all this Fed intervention was preventing a faster market clearing event. We feel likely outcomes remain:
- Depressionary deflation followed by hyperinflation or war, OR
- Economic recovery with just a touch of inflation.- Fed Success OR
- Unintended Inflationary Consequences far outstripping economic gains.- our top choice
The following are offerred with no comment
*H/T @MametDavid for heavily borrowing phrasing from The Wicked Son . We did not intend to demean your subject matter, but rather honor your prose. The concept of "the other" and the folly of using rational arguments against psychotic prejudice can be found across many disciplines in life- Chag Sameach
Vince and Soren
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