This question is a better one now than it's ever been in my lifetime.
I remember many years ago, in the 1980s and early 1990s, when I
started investing on my own. Back then, I often read arguments by
various gold bugs and libertarian-leaning economists about how the U.S.
dollar was on a path to total destruction. Even then, I was often
reminded that all fiat currencies meet the same fate, and that the
dollar would be no different.
Fast-forward a few years to 1997, when I started communicating that
same message for a living. Though I remained more concerned with other
things, I kept revisiting this message. I kept thinking the Fed's
actions would have dire financial consequences for all of us... but for
about 10 years, nothing apocalyptic happened. Every time it looked like
the end was finally nigh and the day of economic, political, and
financial reckoning was upon us, the Fed would ease, the market would
rebound, and away we went on another bullish tear.
But at long last, it seems as though we've finally arrived at the
point of no return. Anyone who lends the U.S. government a penny at this
point is simply suicidal.
And you don't have to guess about this, either. Listen to the market. It's trying hard to tell you something very important...
More than once, I've said late 2008 was the blow-off top of a
multi-decade bull market in Treasury bonds. That's still correct, as
interest rates continue to make higher highs and higher lows. Treasury
bond prices move opposite to interest rates. So they're making lower
highs, and soon, I expect, even lower lows.
Thirty-year U.S. Treasury bonds were yielding as little as 3% in
late 2008. Today, they're yielding over 4.5% – an enormous move. If
interest rates double in the next year or two, it won't surprise me a
Big moves down in U.S. Treasury bond prices aren't supposed to
happen. You're not supposed to think of Treasury bonds as risky. They're
where you go when you're afraid of risk.
It's not just the federal government in trouble. The iShares
S&P National Municipal bond fund has collapsed. Every time it looks
like it's rebounding, it bounces to a lower step. Its recent 52-week low
is 10% below its 52-week high. That's an enormous move for municipal
That kind of drop isn't supposed to happen to municipal bonds. All
my life, muni bonds were the second safest investment in the world, next
to U.S. Treasury debt. Now, they're loaded with risk, and everybody
either knows it, or is starting to get wind of it.
Finally, after years of believing the collapse of the U.S. dollar,
though inevitable, was apparently far in the future... it's here.
The crisis so many people have thought and written about for so
many years has finally arrived on our doorstep. It's no longer
appropriate to say we're worried about the world our children or
grandchildren will inherit. We need to be worried about ourselves.
Like any good demon, the destruction of the U.S. dollar has arrived
with a smile on his face, in the form of an ebullient stock market. The
S&P 500 has rallied 75% since early 2009.
Focused, as usual, on the rearview mirror, investors are way too
bullish according to every stock market sentiment indicator I've seen.
The American Association of Individual Investors Sentiment Survey, the
Investors Intelligence survey of newsletters, Ned Davis Research's Crowd
Sentiment Poll... they all point in the same direction: The great horde
of individual stock market dabblers is in a hypnotic trance,
deliriously happy in its belief that stocks can and will rise to the
moon. The Fed is selling pure B.S., and the herd is buying it.
At the risk of seeming callous or unconcerned for my fellow man
(the poor sod), this is the stuff of which Opportunity (with a capital
"O") is made. The first bet is one we've encouraged you to make dozens
Gold, the anti-dollar, has been telling us for 10 straight years
that the crisis is coming. Gold was around $252 an ounce in the summer
of 1999. It's now around $1,350. Gold is up fivefold against the U.S.
dollar. That's not a great statement of confidence in the world's
reserve currency. And it's important that we continue to pay attention
to it. It's something you should notice – and something the government,
the Fed, CNBC, and Wall Street hope you don't notice.
Buy gold. Hold it. Caress it. Love it. Hide it. But don't sell it.
With the (allegedly) safest bonds in the world crashing, stocks
clearly overvalued, and gold near new all-time highs, it's not hard to
figure out what to do. Own gold and silver bullion. Own natural resource stocks. Hold plenty of cash and sell fairly valued and overvalued stocks.
The market is telling you tough times are here. Stick with my
advice and you'll protect yourself and even profit while others lose...
and wonder what the heck is going on.
P.S. In my
newsletter, I've been studying and
preparing my readers for the coming crisis. In my latest issue, I
feature two positions that will profit on a market correction and an
increase in the value of hard assets – both likely consequences of
dollar destruction. And I show readers exactly what actions to take as
the value of Treasurys and municipal bonds crash. Learn how to get
immediate access to my research