The Best Hedge Against Armageddon Money Can Buy

Legacy Research Group

March 1, 2021

Chris Lowe
Chris Lowe

Gold just entered a bear market… It's still the best hedge against Armageddon money can buy… In the mailbag: "Love is in the air, wherever you are"…


We like to talk about big wins here at the Cut

If you’ve been following along for some time, you’ll know it’s our mission to showcase the best moneymaking ideas from the Legacy Research team.

And I (Chris Lowe) like nothing more than reporting back to you on how those ideas have given our readers the chance to really move the needle on their wealth.

It’s already shaping up to be a banner year…

For instance, I showed you how colleague Teeka Tiwari’s “Tech Royalty” recommendations are up an average 526% and are paying an average interest rate of nearly 10%. (For more details, catch up on Teeka’s free “Tech Royalty” Summit here.)

I also showed you how our commodities expert, Dave Forest, just gave readers of our International Speculator advisory the chance to make a 1,019% gain in just four months. It was on tech-metal mining company Rare Element Resources (REEMF).

And I spotlighted how the “bitcoin stock” recommendations Nick Giambruno made at our Crisis Investing advisory have soared 447%, 567%, 1392%… and 1,852% – all in less than seven months.

But as you’ll see today, not every megatrend we track for you is paying off at the moment…

One notable exception is gold…

Gold is our favorite precious metal at the Cut. And I’ve been recommending you own some since we launched this premium e-letter to all paid-up Legacy readers in August 2018.

Since then, gold is up 46%, which is not too shabby.

But over the past six months, gold has been one of the few assets on the planet that investors have lost money on.

That’s despite a set of usually bullish factors – including rising inflation fears and rampant central bank money-printing – being in play.

So today, we’ll take a look at what’s going on with gold…

And I’ll show you why gold belongs in everyone’s portfolio… despite its recent weakness.

Gold just dropped into bear market territory…

Take a look…

image

The price of an ounce of gold has dropped from a 12-month high of $2,070 in August 2020 to $1,722 today. That’s a 20% fall…

That means gold has entered a bear market – defined as a decline of 20% or more from a peak.

And this has happened as inflation expectations have soared.

This next chart looks at something called the five-year breakeven rate. It’s a widely watched measure of where bond investors think inflation is headed.

image

Bond investors went from factoring in an annual inflation rate of 1% in 2016 to a rate of 2.4% today.

This isn’t a perfect predictor of where inflation is headed. But it tells us inflation fears rose sharply and rapidly through gold’s recent decline.

Even rampant money-printing has failed to ignite a rally…

I probably sound like a broken record… But one of the biggest issues facing investors is unprecedented money-printing by central banks.

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You can see what’s going on by looking at M2 money supply growth.

It’s a way of tracking how many dollars there are in the U.S. economy. This includes physical cash along with checking deposits, bank deposits, and money market funds.

image

M2 stood at $18.3 trillion at gold’s peak in August last year. Today, it stands at $19.3 trillion.

That means there are 5% more dollars sloshing around than there were at gold’s peak.

So what gives?

It’s a question I put to our globetrotting gold bug, Tom Dyson…

As you may already know, in 2018, Tom converted all his dollar savings to gold.

And in 2020, he launched a special-situation advisory called Tom’s Portfolio. It heavily focuses on gold and gold stocks.

Tom believes gold will be the best way to shield his savings as money-printing, currency debasement, and inflation get out of hand. So I wanted to know what he thought of the recent weakness in gold.

Here’s what he told me…

I don’t read much into daily – or even monthly – fluctuations in the gold price. I look at the big picture. I look back to the year 2000. Gold has gone up 517% since then.

It’s gone up even in terms of stocks. Gold has done so well over the last 20 years compared to the Dow and the S&P 500. If you look over a broad sweep of time like that, you see that gold is doing very well.

So I don’t think you can draw conclusions about the gold price action by looking at the last six months. I don’t think you can say, “Gold is not doing its job.”

That’s why Tom isn’t worried about the recent dip…

I’m going to keep holding my gold. I’m taking a 10-year or 20-year view on this.

Over the past year, the fiscal crisis in the U.S. has been brewing. The government is bankrupt. And coronavirus has brought that crisis forward much faster.

The feds are now spending far more money than they were spending before. The deficits are much larger. Money-printing is much greater. The economy is much weaker. The debt bubble is growing faster, and on and on…

Those are the fundamentals I’m watching. And this year, they’re accelerating. Ultimately, that must be good for gold.

And there’s another reason you shouldn’t let go of your gold…

Gold is a hedge against Armageddon…

Few investors care about gold when the good times are rolling on Wall Street.

But it’s something you’ll be happy you own when stocks are crashing.

Just look at the October 2008 stock crash that kicked off the last global financial crisis.

image

Over the next three years, gold rocketed from $724 an ounce to more than $1,900 an ounce.

That’s a 162% gain – a near triple in price.

Gold did what it was supposed to do – it disaster-proofed your portfolio.

So our advice on gold remains the same…

Own some gold in your portfolio. Hold it for the long run. Treat it as an Armageddon hedge.

It may not always track inflation concerns… or central bank money-printing. But it’s one of the best ways to offset tumbles in the stock market when they come along.

Teeka recommends his Palm Beach Letter subscribers allocate 5% of their wealth to gold. But the exact amount is up to you.

Our favorite way to buy gold is in physical form – either coins or bars. You can find out more about how to do that in the free special report the folks at Casey Research put together here.

You can also own physical gold in the stock market through shares in a gold trust.

Our favorite is the Sprott Physical Gold Trust (PHYS). You can buy it just as you would a regular stock. It stores gold bars allocated in your name in vaults at the Royal Canadian Mint.

In the mailbag: “Love is in the air, wherever you are”

Over at his daily e-letter, Postcards From the Fringe, Tom keeps his readers informed about his thesis on gold.

He also writes with unflinching honesty about his battle with depression… and how his family’s love helped him rebuild his life.

And last week, Tom shared some more personal news. He and his ex-wife, Kate, just got remarried…

imageTom and Kate Dyson pictured after their remarriage,
with their children, Dusty, Penny, and Miles…

As he put it in Wednesday’s Postcard

We didn’t have any wedding guests. But we had three young witnesses… who were later paid in cake for their services.

And of course, you, our dear readers, who have supported, encouraged, and propelled this love story all along, were there with us in spirit.

Tom’s readers were quick to wish the happy couple well…

Reader comment: Wonderful news! Congratulations, Tom and Kate, for tying the knot again (and so much tighter this time)! I appreciate a great love story – and yours is certainly one. What a role model you two are for the kids.

Reader comment: Best wishes and congratulations on your remarriage. In my humble opinion, it was the best decision you could have made for the good of your family. Love is in the air, wherever you are.

Reader comment: You have been talking about remarriage for quite a while. It sounds like you were always a part of each other. Love sometimes is an overused word, but friendship and having a partner to share your life with is the most valuable thing you will ever experience.

Reader comment: Congratulations on your remarriage to Kate. I think that is wonderful, and you have now welded your family back together. I will lift a toast to that. Your Postcards are super. They are the first things I read in my mailbox.

Reader comment: Was (re)marriage the right thing to do? Just look at the faces of your children in that picture – full of pride, peace, and happiness – for your answer. I’d recommend looking at that picture every day and keeping what it represents as a top priority in your life. Now, do the right thing, and buy Kate her first bitcoin.

Have you been following Tom’s insights into life, love, and investing in Postcards From the Fringe? If not, you can sign up for free here.

As always, send your questions and comments to feedback@legacyresearch.com.

Regards,

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Chris Lowe
March 1, 2021
Bray, Ireland

Like what you’re reading? Send your thoughts to feedback@legacyresearch.com.

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