Month: September 2017

Up until April 2012, members of Congress and their staff were the only people in the country actually allowed to trade stocks on insider information.  That was supposed to change with the passage of the STOCK (Stop Trading on Congressional Knowledge) Act which was signed into law by Barack Obama on April 4, 2012.  But, as we all know, laws are only meaningful to the extent our legislators and bureaucracies are willing to enforce them.

Given that intro, it is with great ‘shock’ that we share with you the results of a Politico study which would seem to suggest that Congressional aides continue to trade on insider information on a fairly regular basis despite the existence of the STOCK Act.  We guess the SEC didn’t take seriously the STOCK Act’s attempt to “criminalize behavior that is normal.”

The first such example of a “questionable” trade comes to us from Daniel Swanson, an aide to Senator Dick Durbin (D-IL) of the Judiciary Committee…why does it not surprise us that our first example comes from Illinois?  As Politico notes, Swanson made some very “timely” trades in Mylan late last year as he managed to dump up to $60,000 worth of stock just two days before the DOJ levied a $465 million penalty on the company for their EpiPen billing practices.  Ironically, Swanson’s boss worked with the DOJ on the Mylan settlement…

On Sept. 28, 2016, three members of the Senate Judiciary Committee sent a letter to the Justice Department suggesting that the drug company Mylan was violating Medicaid laws.

 

Nine days later, the Justice Department reached a massive $465 million settlement with the firm.

 

In between, another action happened almost invisibly: A Judiciary Committee aide to Sen. Dick Durbin (D-Ill.) dropped somewhere between $4,004 and $60,000 in Mylan stock from his and his child’s portfolios.

 

If an aide had done the same thing in the executive branch, he or she could be investigated for violating federal conflict-of-interest law. But the Durbin aide’s ownership of shares of Mylan, and their timely sale, are reflective of Congress’ persistent refusal to crack down on stock trading by staffers, even in firms overseen by their committees.

 

…but we’re sure the timing of the trade was just a coincidence.

 

But it’s not just Swanson, Paul Ryan’s Chief of Staff has also managed to get really “lucky” on the timing of some trades over the years.

David Hoppe, a fellow Wisconsin native and former Hill aide, to serve as his chief of staff. Hoppe left lobbying jobs with both his own firm, Hoppe Strategies, and the K Street powerhouse Squire Patton Boggs to work for the new speaker. After he moved back through the revolving door, Hoppe continued to trade stock in companies with interests before Congress.

 

David Hoppe, a longtime Capitol Hill aide-turned-lobbyist, joined the speaker’s office in late 2015 as Ryan became speaker of the House. Through personal accounts, Hoppe and his wife bought and sold shares in dozens of stocks while Hoppe worked at the speaker’s office, including purchases of energy and pharmaceutical stocks made shortly before Congress passed bills benefiting the companies he traded. Hoppe told POLITICO he did not discuss any stock trades with his brokers while working for Ryan.

 

And the list goes on and on…

Diane Dewhirst, deputy chief of staff to House Minority Leader Nancy Pelosi, disclosed her spouse’s purchase of stock in two pharmaceutical companies, Astrazeneca and GlaxoSmithKline, in December 2016, shortly before Congress passed a medical research bill that benefited both companies.

 

Meanwhile, on the House Energy and Commerce Committee, which sets energy policy and is the main committee overseeing Obamacare, at least six aides have bought and sold stock in companies with interests in the work of the committee. One longtime committee aide in an oversight role bought and sold more than two dozen health care and energy stocks during 2015 and 2016 and sold his stock in Express Scripts, the prescription drug sales company, as the company came under scrutiny over its role in setting drug prices last October.

 

On the House and Senate appropriations committees, which make broadly influential spending and policy decisions through annual government funding bills, at least 18 House aides and 14 Senate aides have bought or sold at least one stock, through their own accounts or family members’. For example, one senior House Appropriations aide working for a member focused on energy and water funding has, through various family accounts, bought and sold shares in companies including Royal Dutch Shell, Energy Transfer Partners, Dow Chemical and Emerson Electric. Another longtime aide on the committee’s staff who is focused on investigations and research, which are at the heart of the committee’s decision-making, holds and trades stock in companies with major interests in the committee’s work, including pharmaceutical companies such as GlaxoSmithKline and energy companies such as Occidental Petroleum.

Of course, proving that a Congressional aide traded on insider information can be next to impossible which is precisely why watchdog groups have long called for staffers to be restricted completely from trading stocks of companies that have business before their committees. 

Government watchdogs say that, at a minimum, staffers should be prevented from buying shares of companies with business before their committees. But they are not. And despite the disparity between the rigorous standards for the executive branch and the laxness of Congress, the House and Senate have taken a permissive approach even to enforcing existing rules.

 

That’s a serious problem, watchdogs say, because aides often have more of a hands-on role than the members themselves in crafting details of legislation that could have enormous consequences for individual companies. And because aides are rarely in the spotlight, there’s more potential for ethical lapses to go unnoticed.

 

“The staff level is actually more dangerous, because they don’t get scrutiny and they’re not accountable,” said Meredith McGehee, chief of policy at Issue One, a watchdog group for money and politics. “If a member does it, he can get defeated. A staff person can wield enormous amounts of power that isn’t seen, and there’s really no way to hold that staff accountable.”

But we’re sure this is just an attempt by Politico to “criminalize behavior that is normal…”

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Electricity, internet access and cell phone service have been offline in parts of Puerto Rico for a whole week. And with the island still struggling to rescue people stranded in remote villages, those managing the emergency recovery effort have yet to focus their attentions on the monumental task that looms ahead: Rebuilding the island’s devastated infrastructure, from communications to sewers and water treatment plants that have been damaged by flash flooding and 155 mph winds that Hurricane Maria visited upon the island.

The damage, as Bloomberg reports, has essentially knocked Puerto Rico’s economy back into the 1950s. For locals who’re struggling to begin the process of rebuilding their damaged homes, shops across the island are only accepting cash.

The cash economy has reigned in Puerto Rico since Hurricane Maria decimated much of the U.S. commonwealth last week, leveling the power grid and wireless towers and transporting the island to a time before plastic existed. The state of affairs could carry on for weeks or longer in some remote parts of the commonwealth, and that means it could be impossible to trace revenue and enforce tax rules.

 

The situation further frustrates one of the many challenges already facing a government that has sought a form of bankruptcy protection after its debts swelled past $70 billion: boosting revenue by collecting money that slips through the cracks.

The cash-only economy could create problems for the island’s cash-strapped government, as business owners will no doubt be tempted to avoid declaring some of their revenues, depriving PR’s government of badly needed revenue.

 In fact, the power blackout only exacerbates a situation that has always been, to a degree, a fact of life in Puerto Rico. Outside the island’s tourist hubs, many small businesses simply never took credit cards, with some openly expressing contempt for tax collectors and others claiming it was just a question of not wanting to deal with the technology.

 

But those were generally vendors of bootleg DVDs, fruit stands, barbers – not major supermarkets. Now, the better part of the economy is in the same boat.

And after a week without power, the few ATMs on the island that still work have run dry, while most others are simply out of service.

As Bloomberg reports, many Puerto Ricans were still living off what money they thought to withdraw ahead of the storm. When a branch of Banco Popular in San Juan opened on Monday morning, the line stretched about 200 people deep for banking and ATM services. People fanned themselves with whatever they could find and held umbrellas against the sun. At the back stood Giddel Galliza, 64, a music teacher.

“I didn’t want to come because of the lines,” he said. “I need money for basic needs, food, gas – my tank is full but it won’t be forever. I normally pay with my card.”

 

A similar situation unfolded at a Banco Santander across the street. Erasmo Santiago, a 63-year-old mailman, said he was actually a Popular client but opted to pay a fee and go for the slightly shorter line. “I have my mom living with me, she’s 83,” he said. “So I need money.”

Some store owners, even those in areas of San Juan that are heavily policed, worry that carrying so much cash could leave them vulnerable to a robbery.

In post-hurricane San Juan on Monday, commerce picked up ever so slightly. With a little effort, you could get the basics and sometimes more: diapers, medicine, or even a gourmet hamburger smothered in fried onions and gorgonzola cheese.

But almost impossible to find was a place that accepted credit cards.

“Cash only,” said Abraham Lebron, the store manager standing guard at Supermax, a supermarket in San Juan’s Plaza de las Armas. He was in a well-policed area, but admitted feeling like a sitting duck with so many bills on hand. “The system is down, so we can’t process the cards. It’s tough, but one finds a way to make it work.”

Ultimately, turning the ATMs back on probably ranks lower on the island’s list of priorities than, say, keeping the diesel generators that are powering hospitals in operation, or evacuating 70,000 people from a river valley in danger of being flooded after a nearby dam failed.

Depending on how long outages persist, Puerto Ricans in some areas may need to resort to bartering for essential goods, as residents find ever more creative ways to transact in the absence of modern technology.
 

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Authored by Kevin Muir via The Macro Tourist blog,

One of the great parts of writing this letter is the people I get to meet. Among those I enjoy hearing from is former NYSE floor trader, Clay Tompkins. His years spent on a trading floor gives Clay a certain insight about markets that is tough to describe. It involves a willingness to fade consensus accompanied with a healthy respect for the power (madness?) of the crowd.

Clay sends me tidbits from time to time, with a few wise words that always seem to resonate with me. In the heat of the summer, he started sending warnings about Apple.

Kev, There’s an interesting piece on Novo Nordisk in the WSJ today, about how they improved their insulin and raised prices accordingly, with the result that customers opted for the older, cheaper formulation.

 

Apple is doing the same, and I think the results will be the same. My daughters scoff at the idea that they or their friends would seriously pay $1100-1400 for the new phone. Andy Kessler called this the “ radial tire” problem, whereby radials, getting 50,000 between replacement killed the bias ply model which needed changing every 12,000.

 

Buffett and Tepper and all the rest are too rich to get it.

 

I know your site says “ macro”, but at 3.6% of the S&P, a falling Apple will have real repercussions.

At the time Apple was trading at $161, and few were bearish of America’s largest stock. Then on August 24th, Clay sent another note with a link to a Business Insider article, “Dixons Carhone shares crash over 30% as ‘people hold on to their phones for longer’”. He ended the email with the words, “And they still bid AAPL. I think the longs lose the thread in 3 weeks…”

Well, Clay was almost spot on, only missing the fact that Apple longs had just one more week of gains ahead of them! As soon as September hit, the pink tickets came out for Apple.

Today, most know the bearish Apple story. A disappointing new iPhone announcement, with few new must-have features, has resulted in the lowest pre-orders Apple has seen in quite some time. Clay is on to something, and as usual, way ahead of the curve.

Now some of you will look at the last couple weeks of Apple stock weakness and claim the bad news is already discounted. But I don’t think it is too late to sell. Not by a long stretch.

I know Apple is cheap on a fundamental basis. I know Buffett owns it, and has “never sold a single share of Apple.” Yeah, the PEG ratio is low, but when you reach Apple’s size, it’s difficult to justify a big multiple based on continuing growth. Eventually, you hit a point where growth becomes increasingly difficult. And I think Apple has reached that point.

Yet it’s not just Apple that worries me. Check out this headline.

I realize that eventually even Mark Zuckerberg needs to eat the marshmallow, but let’s not kid ourselves – Zuck is not selling because he needs the money.

There have been a handful of hot tech stocks that have driven this rally of the past few years. The so-called FANG group (Facebook, Amazon, Netflix, Google), along with a couple of other cult favourites (Apple and Tesla), have captured almost all of the speculative fervour.

Along the way, skeptics have been ignored and bearish arguments have not mattered. Dips have just been buying opportunities, and the Nasdaq has led the stock market rally higher. Yet that is slowly shifting. During the last couple of weeks I have noticed that often Nasdaq underperforms the broad market, and it looks more tired than Lindsay Lohan’s probation officer.

Over the weekend, L2 Professor Scott Galloway wrote a must-read piece about the potential inflection point for these tech darlings. Take the time to read it – “No Mercy / No Malice: The Worm Has Turned“.

These stocks are a potential disaster in the making. They are over-extended, behaving poorly, have insiders pitching stock, and most importantly, smart, big picture thinkers are for the first time questioning their business models all the while, shrewd, market savvy veterans are leaning on the sell button.

Many a pundit have made fools of themselves calling for the top in the stock market, but I think we are at an important point for the FANG + APPL and TSLA stock crowd. I am by no means a perma-bear, and have at times even reluctantly joined on the bull side. Yet I can’t help but get the feeling that we are close to the point where all the good news for these tech favourites is baked-in.

Don’t believe me that investors might be a little over confident about FANG’s continuing dominance? How about this new ETF?

When they start making levered ETFs that go long one of the FANG stocks (Amazon), while simultaneously shorting its competitors, you know you have reached the point in the party where it is time to look for the door before the cops show up.

I don’t know how I am going to express this view. Maybe I will shift some of my hedges into Nasdaq put spreads. Maybe I will sell Nasdaq futures against a long position in the S&P’s. Maybe I will just short the FANG basket. I just know the time where I want to be long these trendy stocks is long past, and for the bold, writing some short sell tickets is probably the right trade. After all, even Zuckerberg has finally hit the sell button, and according to all the millennials I know, that guy is a genius.

*  *  *

Long grains: worse than the Casino

My buddy Clay’s prescient call on Apple was the trigger for today’s post, but I wanted to talk about another completely unrelated trade. And the funny part is here too, Clay recently sent me an article that struck a chord. From Reuters:

Large part of Louis Dreyfus’s grains team leaves company

 

PARIS (Reuters) – A large part of Louis Dreyfus Company’s European grains trading team, including Global Head of Grains David Ohayon, has left the company, trade sources said on Tuesday.

 

No one was available at Dreyfus for comment.

 

Several sources also said Cesar Soares, Regional Head of Grains for Europe and Black Sea, and senior trader Pascal Durouchoux had left.

 

Dreyfus is part of the so-called ABCD quartet of global agricultural traders along with Archer Daniels Midland, Bunge and Cargill [CAR.UL], which have been restructuring in response to falling profits.

In the summer of 1987, Salomon Brothers closed their entire money market division because of lack of profits – after all why bother trading T-bills when stocks were flying? A few months later, the equity crash hit, and money markets went bizerk. Time and time again, the closing of desks, or the leaving of entire teams, signaled a secular low in that asset class.

You can probably see where I am going with this. The trouble is, you have heard me make this argument before. And let’s be honest, grains are not my friend.

In the epic Scorsese film, Casino, Sharon Stone’s character, Ginger, keeps going back to her deadbeat boyfriend, Lester Diamond (played by James Woods), no matter how well she is treated by her husband Sam Rothstein (Robert De Niro). Sam showers her with everything she has ever wanted, diamonds, furs, cars, but it doesn’t matter. Ginger can’t help but return to the loser boyfriend.

Well, grains are my Lester Diamond. No matter how much pain they bring me, I come back like a lost puppy. Now sometimes I managed to squeak out a little win, catching a reluctant fleeting rally. But grains always end up betraying me.

Although I love to remind everyone of Don Coxe’s famous line, “the best bull markets occur when those that know it best, love it least, because they have been burned the worst, I am approaching the point where I am wondering if I should continue picking up Lester’s phone call. After all, don’t the other markets treat me fine? Shouldn’t I be happy putting grains in the rearview mirror?

I have been fortunate to avoid one of the post-GFC’s (Great Financial Crisis) greatest destroyers of wealth – the VXX long trade, but I have replaced it with my own relentless bleeding asset – wheat, and the other grains.

Now before you get too despondent about wheat’s performance, this chart is somewhat misleading. On a relative basis to VXX, wheat is an all-star.

Since the GFC, holding a straight long position in VXX has cost you almost 100%. Wheat, on the other hand, has lost you only 63%.

All kidding aside, grains are my nemesis, and I understand if you ignore my ramblings on the subject. My much-hoped-for secular turn is nowhere to be found, and timing on any blue tickets has had to be near perfect to make any money.

But I refuse to give up on grains. I still believe it to be one of the last true remaining “cheap” assets.

And like an idiot, I am going to tell you why I am buying them again.

This summer we had a little bit of a weather scare, but it lasted for about two weeks before the relentless grain selling returned.

Once again we had a great growing season, and according to the USDA, yields are terrific. The trouble is that many farmers don’t believe the reports, and have been waiting to hedge their crops.

So every tiny bit of a rally has been met with a barrage of selling from offside producers. And that’s why we have melted lower.

Call it spidey-sense, or call it stupidity, but I think it is time to buy the grains again. Almost everyone has given up on this perpetually disappointing asset class. Ag desks are closing, farmers are throwing in the towel, futures traders are loath to even mention the word. Grains are still the last remaining cheap asset, and I am not giving up. After all, grains are one of my true loves, and I know they won’t hurt me again…

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Another day, another major hacking.

The Guardian reports that in the latest corporate cyber breach, one of the world’s “big four” accounting and consultancy firms, Deloitte, was been targeted by a sophisticated hack that “compromised the confidential emails and plans of some of its blue-chip clients.” And just like Equifax, New York-headquartered Deloitte was similarly the victim of a cybersecurity attack that went unnoticed for months. The Guardian understands Deloitte discovered the hack in March this year, but it is believed the attackers may have had access to its systems since October or November 2016.

Responding to questions from the Guardian, Deloitte confirmed it had been the victim of a hack but insisted only a small number of its clients had been “impacted”. It would not be drawn on how many of its clients had data made potentially vulnerable by the breach. Alas, the company has yet to provide a full disclosure of just who and which clients were violated: an estimated 5 million emails were in the hacked email cloud and could have been been accessed by the hackers. Deloitte said the number of emails that were at risk was a fraction of this number but declined to elaborate.

While unlike Equifax Deloite is not a public public corporation and is not accountable to countless shareholders, with $37 billion in revenue last year, Deloitte is a behemoth which provides auditing, tax consultancy and – like Equifax – high-end cybersecurity advice to some of the world’s biggest banks, multinational companies, media enterprises, pharmaceutical firms and government agencies.  Here the Guardian reports that Deloitte clients “across all of these sectors had material in the company email system that was breached. The companies include household names as well as US government departments.“

So far, six of Deloitte’s clients have been told their information was “impacted” by the hack. Deloitte’s internal review into the incident is ongoing.

 

The hacker compromised the firm’s global email server through an “administrator’s account” that, in theory, gave them privileged, unrestricted “access to all areas”.

Embarrassingly, the administrator level hack required only a single password and did not have “two-step“ verification, much like Deloitte and other companies strongly urge everyone to do.

As the Krebs on Security blog further notes, “according to a source close to the investigation, the breach dates back to at least the fall of 2016, and involves the compromise of all administrator accounts at the company as well as Deloitte’s entire internal email system“

Penetrating the unknown number of emails involved breaching the Microsoft cloud used the by the company. Emails to and from Deloitte’s 244,000 staff were stored in the Azure cloud service, which was provided by Microsoft. This is Microsoft’s equivalent to Amazon Web Service and Google’s Cloud Platform.

In addition to emails, the Guardian adds the hackers had “potential access to usernames, passwords, IP addresses, architectural diagrams for businesses and health information. Some emails had attachments with sensitive security and design details.”

Until today’s report, the hack had been disclosed to the public: the breach, which was US-focused, was regarded as so sensitive that only a handful of Deloitte’s most senior partners and lawyers were informed.

The team investigating the hack is understood to have been working out of the firm’s offices in Rosslyn, Virginia, where analysts have been reviewing potentially compromised documents for six months.

 

It has yet to establish whether a lone wolf, business rivals or state-sponsored hackers were responsible.

Translation: while Putin wasn’t accused of hacking Equifax, he may yet get the blame this time.

Making this breach even more complicated, it is still unknown what information the hackers acquired: Guardian sources said if the hackers had been unable to cover their tracks, it should be possible to see where they went and what they compromised by regenerating their queries. This kind of reverse-engineering is not foolproof, however.

“In response to a cyber incident, Deloitte implemented its comprehensive security protocol and began an intensive and thorough review including mobilising a team of cybersecurity and confidentiality experts inside and outside of Deloitte,” a spokesman said. “As part of the review, Deloitte has been in contact with the very few clients impacted and notified governmental authorities and regulators.

 

“The review has enabled us to understand what information was at risk and what the hacker actually did, and demonstrated that no disruption has occurred to client businesses, to Deloitte’s ability to continue to serve clients, or to consumers. We remain deeply committed to ensuring that our cybersecurity defences are best in class, to investing heavily in protecting confidential information and to continually reviewing and enhancing cybersecurity. We will continue to evaluate this matter and take additional steps as required.”

 

“Our review enabled us to determine what the hacker did and what information was at risk as a result. That amount is a very small fraction of the amount that has been suggested.”

Deloitte declined to say which government authorities and regulators it had informed, or when, or whether it had contacted law enforcement agencies.

Of course, as noted above, the breach is a deep embarrassment for Deloitte, which offers clients advice on how to manage the risks posed by sophisticated cybersecurity attacks. If only the company had followed its own advice.  Even more awkward, in 2012 Deloitte was ranked the best cybersecurity consultant in the world and has a “CyberIntelligence Centre” to provide clients with “round-the-clock business focussed operational security.” It is unclear if that unit was also hacked.

While we await an official statement from Deloitte, what comes next is lots of lawsuits and even more settlements. According to the Guardian, on 27 April Deloitte hired US law firm Hogan Lovells on “special assignment” to review what it called “a possible cybersecurity incident”. The Washington-based firm has been retained to provide “legal advice and assistance to Deloitte LLP, the Deloitte Central Entities and other Deloitte Entities” about the potential fallout from the hack.

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Authored by Simon Black via SovereignMan.com,

Earlier today in Sri Lanka’s Colombo International Airport, a passenger was arrested by local authorities and found to have stuffed nearly $30,000 worth of gold into his rectum.

That’s nearly 1 kilogram of gold. In his ass.

The gold had been carefully wrapped in plastic and included four small bars and multiple chains of jewelry.

Airport police were tipped off when they noticed the 45-year old man “walking suspiciously.” No sh*t, Sherlock.

And curiously this was not even close to the first incident of rectal gold smuggling in Sri Lanka.

Just last week another passenger was found with 314.5 grams of gold stuff inside her rectum. Amateur.

Gold, of course, has a long history of value and marketability, going back to ancient civilizations that have been extinct for thousands of years.

Archaeologists have unearthed dozens of graves, some of which date back more than 6,000 years, containing gold artifacts.

It is, by far, the oldest form of money that is still in existence today.

And it is a form of money. Despite you and I not being able to pay for a Starbucks coffee with gold, governments and central banks continue to hold the metal as part of their official international reserves.

Gold has also long been considered a traditional ‘safe haven’ asset. When the world goes crazy, the gold price spikes.

In the days after the 9/11 attacks 16 years ago, for example, the gold price shot up 33%. In the first few days of the Global Financial Crisis in September 2008, the gold price rose more than 20%.

And, until recently, every hint of a North Korean missile test sent the gold price higher.

In May 2013, for example, the North Korean missile test sent gold rising $54. Even earlier this year, North Korea’s missile test in April sent the gold price rising nearly $40.

Yet now, despite the prospects of war on the Korean peninsula being at the highest levels in decades, the gold price is actually falling.

This is totally backwards.

It’s not just the gold price, either. Physical demand for precious metals has also been lower in 2017, given the US mint’s dramatic 67% decline in sales earlier this year.

And the World Gold Council has also reported steep declines in gold demand so far in 2017– 18% in Q1 and 10% in Q2, most notably due to reduced demand from gold ETFs.

This trend makes sense given what we see in the news… or rather, don’t see in the news– have you noticed that no one really talks about gold anymore?

Gold commentary used to be a staple in financial media. Now the winds seem to have shifted– it’s all about cryptocurrency.

Cryptocurrency is definitely exciting. And with such absurd gains, it’s no wonder that crypto has been dominating headlines.

Crypto also represents the future.

Just today I received a payment to the bank account of our agriculture company here in Chile; the wire transfer originated in the United States, yet took three days to arrive.

Along the way, the banks took around $500 in fees. Around $150 of that was the wire transfer fees charged by the sending bank, receiving bank, and correspondent bank, plus another $40 in fees charged by SWIFT, the international payment messaging service.

On top of that, the sending bank charged a fat fee to convert the funds from dollars to pesos even though we explicitly instructed them to NOT convert.

Then the receiving bank charged another fat fee to fix the mistake and convert the funds back from pesos to dollars.

Unbelievable.

A cryptocurrency payment over the blockchain, on the other hand, would have taken minutes… maybe an hour or two at most. And cost less than $1.

As I’ve ranted about in the past, the crypto market is full of bubblicious irrationality at the moment. But the underlying technology is still revolutionary and highly disruptive.

(Not to mention our friends in Sri Lanka don’t have to cram any bitcoins into their rectums…)

But crypto’s power and potential is not in conflict with gold. Both represent a decentralized form of money. Both represent an alternative to the banking and monetary system.

It’s not a competition between gold and Bitcoin.

As a colleague of mine once said, I own gold for all the “I don’t knows.”

Will the US and North Korea go to war? I don’t know.

 

Will the US default on its enormous (and growing) $20+ trillion debt? I don’t know.

 

Will the central bank be able to expertly engineer the unwinding of its $4.5 trillion balance sheet and raise rates from historic lows without triggering any consequences whatsoever in financial markets? I don’t know.

By being 100% in dollars (or euros, pounds, renminbi, etc.), you are effectively saying, “Yes, I do. I know exactly what’s going to happen in the future. Everything is going to be fine forever, so I don’t need to hedge myself even one bit.”

That’s a pretty lofty bet.

Gold and crypto are both cut from the same cloth… and one trait they have in common is that they’re both for the “I don’t knows”.

This is not a question of either/or. The answer is both.

Do you have a Plan B?

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