The sands of time are shifting, and so are vast swaths of geopolitical fault lines … entire countries … economic
systems and yes, the financial markets.
It’s the cumulative affect of intended and unintended consequences of …
Western governments who embraced Keynesian-style socialism, thinking they could toy with economies through government spending and taxation to try and make the world a fairer place to live.
Yet it’s now backfiring on them, leading to bankrupt governments, pension crises, housing instability, class warfare and more.
Eastern governments, Asia, rising from the ashes of communism and feudal societies, ushering into the 21st century nearly 4 billion souls, more than 60 percent of the world’s population …
Creating gargantuan demand in every area of life, putting excessive demands on Mother Earth’s natural resources … sending Asian economies on a rocket ride higher, while the West slumps miserably.
Political leaders, caught in the crossfire, knowing not what to do, but to repeat the mistakes of the past. Consciously or unconsciously, leaders of Western economies are turning against their own people, raising taxes, hunting down every penny of their assets, confiscating assets in Europe, preparing to confiscate assets in the U.S. of A.
Central banks, running amuck, still printing money, now even buying equities, trying desperately to reinflate the global economy.
Financial markets, some not knowing whether they are coming or going, some coiling up like a tightly wound spring, ready to explode higher … while others are dancing on the edge of a cliff.
What’s an investor to do?
My view: With the ramping up of the war cycles, the cycles of human nature that predispose societies to conflict and that cause immense turmoil in economics and markets …
Every investor should batten down the hatches and prepare to both protect your wealth and profit from the coming turmoil, the shifting sands of time … from the crises and the opportunities they present.
The steps I recommend …
FIRST, if you haven’t already done so, start buying gold again. Physical gold and gold ETFs. Add some silver too. Nibble away at the metals, and if they move a tad lower, buy more.
SECOND, I maintain my view that the stock markets of Europe and the United States are on the edge of a cliff. Don’t be complacent. Don’t think for a minute that they can’t go over the cliff. They can and will.
They will soon plummet in a short-lived, but very sharp plunge that will scare the dickens out of almost everyone.
How low can they go? Let me give you my new, worst-case targets:
Dow Jones Industrials, 13,623 (20.25 percent)
S&P 500 Index, 1,510 (23.7 percent)
Nasdaq, 3,612 (19.2 percent)
Europe, in general, based on the iShares Europe ETF (IEV), still 21 percent below its 2007 high, Europe’s equity markets are headed for another devastating plunge that will see them shed, on average, more than 43 percent.
Be smart. If not already out of U.S. and European equity markets, get out now while you can.
Stand on the sidelines with most of the proceeds, using some of it to buy gold and silver, some to buy select Asian equity markets — and most of the cash kept ready to buy back equities after the crash.
THIRD, don’t be complacent about the sovereign bond markets of Europe and the U.S. either. Interest rates will stay low for a while longer, due to so many threats out there and the still present — but weakening — perceptions that sovereign securities are safe.
They are not safe. Sovereign bond prices are on the edge of a cliff too, and there are far safer and better places to put your money these days.
FOURTH, get ready to deploy capital intensely in the commodities sector. Oil and energy are bottoming. Grains are in the final throes of a deflationary decline that I have been warning you about.
Commodities are going to represent some of the most spectacular gains going forward. Pay particular attention to natural gas, which is now making an important secondary bottom and will soon rocket higher.
FIFTH, no matter what you do, don’t be complacent! Complacency will cost you a bloody fortune.
Stay tuned and stay safe …
View all posts by Larry Edelson