Over the course of the last six weeks major companies around the world have reported significant drops in sales and consumer sentiment. By all accounts, the global economy is coming to a standstill. But somehow financial markets continue to hover near all-time highs. That a day of reckoning is coming is a foregone conclusion. Something is wrong and highly renowned global strategist Marin Katusa explains that the insanity is just beginning:
People have to understand how fast and vicious the money is flowing around. It’s not just the Fed in the U.S., or big hedge funds coming in and out… you have to also consider what I call Dragon Economics… The Chinese effect… Not only does China have a lot of money, but their people have a lot of money and they’re looking to get it out of China.
In one day in April more cotton was traded on the Shanhai markets then the whole year previously… it would be enough to put a pair of pants on every person on the planet… in one day.. there’s not even enough cotton for that… In one day enough soy bean traded for 52 billion servings of soy…
We’re talking about insane speculation that the Chinese money is fueling… In Vancouver crack houses are selling for $2 – $3 million… The Chinese money is desperately fleeing… it moves very quickly…
There are a lot of unknowns here.
In the following interview with Future Money Trends Marin Katusa, who happens to be one of the most successful investors in the world, explains the various dynamics of the global marketplace and how the average investor must position their assets now to avoid the destructive fall out to come – and it will come, because as Marin explains it, some 90% of companies out there are valued much higher than they should be:
Katusa notes that while he continues to acquire assets in the resource space, his funds have now unloaded most of their holdings. Explaining the that anyone with a dart board could have doubled their money in the last six months, it’s time to re-balance your personal portfolios and go with companies that have real value, solid management teams and whose business is focused on sectors with the potential to be explosive in the near to mid-term:
You want to stick with the best in the business. Make sure you take your profits on what you would call your slippery speculations or things that have worked out… If a President is not owning a bunch of stock, you might want to get out of that stock.
I have reduced my fund to five core positions… I am going long and strong on positions that I believe will go up four, five, or ten times from here because the variables that make a good company are in place.
And some of those variables include government and central bank intrusion in the financial marketplace, namely negative interest rates, which Katusa explains will have a deflationary impact on most sectors, but could cause massive upswings in other areas as investors shift capital from risky asset classes to safe havens:
Negative interest rates are going to dry up capital… hence, by definition, will be deflationary in most markets… But within that general macro call you will have pockets of insane inflation… or bubbles.
…For example, where I see gold going… gold is a money and preservation hedge… there’s a lot of money on the sidelines scratching their heads trying to figure out what to do… the Baby Boomers, for example, have lots of money… so what are they going to do? They’re going to want to put their money where it will be safe…
Right now gold takes such a small, small piece of that money looking for safety.. if that percentage of global allocation which is 0.15%… if it just went to 0.3% of that Baby Boomers’ money, the price of gold doesn’t double.
It’s exponential. You’re going to see $4000 – $5000 gold… and we’re talking about just 0.3%.
So I think it’s going to be very deflationary but there will be surges in sectors that will be massive bubbles.
And while usually restricted to his premium subscribers, in the above interview Katusa shares two of his fund’s core positions with listeners. As you may have guessed, the first is a gold sector mining company:
I wrote another seven digit check for Brazil Resources just a few months ago… It’s one of the top performing stocks in the resource sector. Why?
Because it’s the real deal… and when you compare it to any one of the other gold companies it’s not only the most undervalued, but it has the most up-side. There’s a reason why [CEO] Amir Adnani and his management team are buying hand over fist at every financing.
But it won’t just be precious metals that benefit from massive capital flows. The energy sector could see large spikes as well, and not just in oil:
Uranium is a victim of the emerging markets and foreign currency… The Fukushima reactors are coming on slower than people expected… then you have the Chinese that are looking and buying now directly from the mines in Africa… The Russians are doing strategic investments.
Then, what are the Americans doing? Rather than positioning themselves for the future, Obama’s strategy was to sell double the amount of uranium of the Department of Energy’s stockpiles into the markets to fund historic clean ups that have nothing to do with the current producers.
You’ve had all of the stars line up for what will make a bull market.
So, what have I done? I have bought another million shares of Uranium Energy Corp. alongside Morgan Stanley and Rick Rule…
The markets will remain tricky going forward, even for mainstream investment houses and hedge funds. But the fact is, that even during times of crisis there are companies and investments that will not only survive, but thrive.
Hard assets like food and precious metals that you can hold in your hand will certainly be well worth owning as volatility across the globe sends everything into a tailspin.
But for those with investment assets like IRA’s, 401(k)’s, and money market funds, there will be opportunity for significant growth even during economic and financial upheaval.
To learn more about why Marin Katusa is investing in Brazil Resources click here.
For more market commentary and interviews with leading financial experts like the one you just watched visit Future Money Trends.
Disclosure: This author currently holds no positions in the companies mentioned but may acquire holdings in the future.