But first consider a few facts…
- Canada’s central bank rate is up 1500% since March 1st.
- The traditional 60/40 stock/bond portfolio is down 20%, worst performance since 1931
- Global Debt now tops $305 trillion – or 350% of global GDP
- The UK £ hit a 37 year low against the US dollar
- Unfunded US State pension liabilities total $8.28 trillion
- Growing geopolitical tensions include threats of nuclear weapons in the Ukrainian conflict and the Chinese takeover of Taiwan.
This is the context we are living and investing in. In short, it’s not business as usual and just like those people who wake up to find they are renewing their 5 year mortgage at over double their previous rate – not paying attention comes at a price…a big price.
Here’s the Bold Prediction I Promised
If you thought 2022 was chaotic, volatile and dangerous to your financial health – you’re right. But 2023 will be worse. I apologize, that’s an upsetting thing to read but the probabilities are very high.
The European Union energy crisis will be worse. Interest rates will be higher, which will cause major problems for individuals, companies and governments with record debt. In Canada, the Parliamentary Budget Office has already stated that interest payments on Federal debt will reach $40 billion in 2025 – doubled in just 5 years. China’s incursion into Taiwan isn’t a matter of “if” but “when” with many experts believing that the timetable has been moved up now that Xi Jinping has been elected for life.
Even with all that my big worry continues to be in the credit markets. That’s why at the World Outlook Financial Conference in February, 2020 we said that there was one more decline in interest rates coming but starting the early fall the first order of business was to lock in all borrowing rates.
And the second order of business was to protect the buying power of our paper currency, which is why we named the Conference “the Coming Commodity Boom.” This year we continue that theme with a focus on energy.
Our thesis is best explained with a straightforward question. Going forward over the next 5 years, which would you rather own – paper dollars or oil? Copper, silver, wheat or paper dollars? The bottom line is that governments can’t “print” oil, wheat, gold or any other commodity but they’ve clearly shown that they can create paper currency out of thin air. And that has consequences that we are just starting to see in terms of reduced purchasing power.
Since 2014 at the World Outlook Financial Conference and on Moneytalks we’ve consistently recommended buying US dollars on any dip. That’s still the case but it won’t always be. We’ll discuss it further at this year’s Conference because the strength of the US dollar is a huge key to our investment future.
As we stated at last year’s Conference the big move in gold and commodities like wheat, copper etc will take place once confidence leaves the US dollar but the question is where will the capital go. It’s not going to other paper currencies like the £, yen or euro. Our bet is that the answer will be commodities – especially oil.
The trigger for the decline in confidence in the US dollar could be many things but, as the UK and Japan are demonstrating, the creation of trillions of dollars to paper over pension and other pay as you go entitlement problems is likely.
That’s why I’m so pleased that both Martin Armstrong, whose model has proven uncanny in its forecasts, and Greg Weldon, whose understanding of the impact of global trends on the investment markets has made him the analyst other analysts read to understand what’s going on, will both be speaking at the 2023 World Outlook Financial Conference Feb 3rd & 4th in Vancouver.
I’m not going to keep going on and on, which I’ve been known to do, so let me finish with this. The picture for governments, its currencies and sovereign debt is bleak BUT that doesn’t mean you can’t not only survive but thrive in this environment. Our recommendation to be in the US dollar while locking in 5,000 year lows in interest rates alone would have protected you and made you money in the last two years. So would have the move to commodities.
It’s important to understand that what we are experiencing is very different from the 2008-09 subprime mortgage problems, which started in the private sector. Today the problems are centred in the massive increase in sovereign debt and underfunded entitlement programs. But that doesn’t mean that specific stocks in the private sector won’t do very well. Keep in mind that exceptional returns starts during bad times, not once stocks have doubled or tripled. That’s why we’re pleased to feature the stock picking prowess of BT Global’s Paul Beatty at the Conference who promises to give us at least 3 stock gems that have been taken down in the market decline and now offer great value.
We’re also working with Ryan Irvine and Aaron Dunn of Keystone Financial on our annual World Outlook Small Cap Portfolio, which has never failed to deliver double digit returns. Although past performance is no guarantee of future success – I like our chances.
We’ll also be welcoming new analysts and forecasters to this year’s event like Kevin Muir of the MacroTourist and Tony Greer, along with long time favourites like James Thorne, Mark Leibovit and many more.
I’m excited that we’re back live in person this year at the Westin Bayshore, Vancouver on Friday, February 3rd and Saturday February 4th. The Early Bird VIP tickets are now on sale. They sell out every year so if you are interested, my advice is to take action right away.
I look forward to seeing you there.
Host of Moneytalks