This article was contributed by Lior Gantz of the Wealth Research Group.
The three GREAT TRUTHS of these economic times are:
- Governments and central banks MUST GROW the currency supply or risk SOCIETAL COLLAPSE.
- ZERO interest rates can’t BE ALTERED.
- China is FAST BECOMING the world’s most formidable economic power.
Anything and everything you do, whether it is in your career or in your investment portfolio, MUST GIVE ROOM to these facts.
For instance, TRUTH #1 was evident in March and April, when we saw central banks, especially the Federal Reserve, GO ALL-IN.
We published WATCH LIST #1, experienced OUTSTANDING GAINS, then published WATCH LIST #2, which has also delivered HUGE RETURNS, but many assume that with indices at ALL-TIME HIGHS the big profits are behind us.
That’s NOT TRUE!
As you can see, owning the S&P 500 or just the BIG FIVE has been FAR BETTER than owning laggards. Within the ranks, there are SOME SOLDIERS who have yet to become generals, so we are publishing WATCH LIST #3, our newest one, to tackle this opportunity HEAD ON!
Understand that the decision to REFLATE at ALL COSTS, which is truth #1 on our list, has pushed STOCKS, BONDS AND GOLD into all-time highs, at the SAME TIME.
This past July marked this event, A TRIFECTA of new highs (stocks, bonds and gold), which has occurred LESS THAN ten times in the last THREE DECADES.
In each of the previous times, these trends continued for another TWELVE MONTHS at least, with stocks never being down after such an event.
It’s EXTREMELY DIFFICULT to bet on stocks after their best 100-day stretch in history, after the SHORTEST BEAR MARKET ever and news that SHORT POSITIONS are at their lowest since 2005. But the SECOND TRUTH of our times is that rates aren’t going higher, as you’d expect them to in times of ASSET BUBBLES.
As you can see, since the September 11th attack in 2001, there’s been a CLEAR DECOUPLING in America. While rates have been SLASHED BRUTALLY, creating a bonds and equities bubble, more Americans have been laid-off, driven out of participating in the labor force, WIDENING the wealth gap!
Truth #2 is that it is ACTUALLY the CORPORATIONS that are now addicted to zero rates, even more than governments are.
Governments can ABSORB HIGHER interest payments, but businesses and households really can’t.
December 2018 was when this truth was finally put to the test and markets showed the Federal Reserve that if it intends to raise rates above 2.25%, then stocks are worth at least 20% less than current prices.
If you knew that bonds would pay no yield for the NEXT DECADE, would you bid up stocks further? YOU BET, and that’s exactly what’s happening.
This brings us to our THIRD TRUTH, one that is clear to many, but some still REFUSE TO BELIEVE it.
Throughout human history, China’s economy has been responsible for between 20% and 25% of global GDP, with the only exception being the majority of the 20th century.
Don’t make the FATAL MISTAKE of eating with a spoon the falsehoods of Western reporting of the Chinese economic way of life; while the control that government exercises over the individual is OUTRAGEOUS, their financial engine works FOR THEM.
They’re growing like nothing the world has ever seen and we BEST ADAPT to it. China will have a dominant role in the 21st century, yet its chief objective isn’t to TOPPLE DOWN the West, but to find equilibrium.
What investors must realize is that TWO EMPIRES have never worked together for the benefit of mankind. If leadership on both sides finds the path to co-existence, prosperity AWAITS US ALL.
As part of embracing major NEW TRENDS, which the post-Covid-19 world is birthing, we’ve found a BOMBSHELL OPPORTUNITY, which we’ll be updating on this week. It’s a huge moment for investors, so be ready!