Ultra-Wealthy Investors Show Their Cards And They Are Loading Up On Gold - Generalist Investors Would Be Well Served To Follow Their Golden Strategy As They Are Rich For A Reason
It seems like every day another ultra-wealthy investor is talking about the virtues of gold. With a lot of their arguments about the Death Spiral of Debt.
Today, it was legendary investor Paul Tudor Jones praising gold as he argued that all roads are leading to inflation. Combine that with the slowing jobs market, only being propped up by economically draining government jobs growth, is leading toward stagflation as a weak jobs market equals a weak economy.
Recent reports on the debt have seen a surge in debt of late as spending is jumping. Looks like Biden wants to leave on a sad note when it comes to spending. Which isn’t a surprise as he is doing his best to make a new record for a one-term presidency.
Biden’s accomplice Harris and Trump have already shown their true colours when it comes to spending, so whichever one gets in, they will be the new record holder for spending in one term. I’m convinced the next president will drive the debt to $50 trillion by the end of their term in office.
The supply of debt instruments are going to be increased to much higher levels than the alarming current amount. Plus, the yields are paid in fiat currency that is constantly destroying purchasing power. That doesn’t sound like an exciting prospect for investors to me, which begs the question, who is going to buy all that debt?
Big foreign buyers are on a buyer’s strike, and are selling their stockpile to buy gold. Which is a brilliant move. My guess is that before long we will hear more about the increases in the Fed’s balance sheet as they will revive their role as buyer of last resort.
They have to manage the yields on the debt to stay on their path of a rate cutting cycle. They may try to sell the Goldilocks narrative, but they know that there are serious problems in the jobs market and economy. Otherwise, they wouldn’t have gone with an emergency cut of a half-point at the September meeting.
A key theme that keeps coming up for the ultra-wealthy investors that are gold bulls is the debt crisis. With the BRICS meeting about to kick off, the American debt issue will undoubtedly come up, as will their desire for an alternative to the US dollar as the world reserve currency.
Paul Tudor Jones talked about ways to fix the debt crisis, which are twofold, one is to dramatically cut spending or increase taxes. Neither of those solutions are what politicians will do. He also believes that the Fed will have to keep cutting rates allowing inflation to run hotter than they are comfortable with.
I’ve argued the same points in past reports so it is comforting to hear influential investors ringing the same alarm. If the politicians would at least cut spending, which they won’t, and the Fed allowed the economy and inflation to run hotter than they would like, then the debt crisis would improve.
This takes serious strength of character from politicians and the Fed. Sadly, I have zero confidence in politicians or the Fed showing the kind of guts to try to fix the problem. They will keep trying to kick the can down the road as long as they can.
Which means massive spending by the politicians, enabled by the Fed with lower rates and a rapid increase in the Fed’s balance sheet. Ensuring that the Death Spiral of Debt will force the world back to the Gold Standard.
Gold is going much higher as are the gold stocks.
All the best,
Allan Barry Laboucan
