Why I don’t buy into predictions of
deflation, economic misery
I’m an unabashed bull who believes in the USA
and its economic vibrancy!
A few days ago I received a familiar question, this time from paid-up subscriber Jackie F., who asked …
Have you read what (one market expert) has been saying about gold and silver? He has been predicting gold to go down to $750, the Dow Jones to drop to 3,300, and America to go through the biggest deflation in history. Why? Because the biggest baby boom generation in history is retiring, around 66 million.
He has found through his research that every time a large group like this (exits the work force), a big deflation occurs. They quit spending. Today 70% of the economy is due to people spending. What are your thoughts on his predictions?
Thanks so much for your letter, Jackie. Yes, I am fully aware of these events and even the possibilities.
However, I don’t agree at all with many of these conclusions and predictions of doom and gloom.
Part of the deflation argument may be based on what has been going on in Japan for the last three decades. However, comparing the United States to any other country’s experience with deflation is, at best, flawed.
Any comparison to Japan, as far as I am concerned — is really off-base.
In fact, I am confident that we can easily see deflationary fears deflate … and our stock markets and gold double in the next three to five years! Here’s why …
Bonds About to Get Hammered!
I say let the doom-and-gloom prophets preach, while you profit and rejoice.
The market has been up and down this year so far … but I firmly believe the market is going to really pick up steam in the second half of the year.
But when the market really starts rolling, I believe bonds are going to get crushed!
My “Alpha Intelligence” Indicator has already picked up some remarkable early signals. In fact, since the beginning of 2014, my partner Geoff Garbacz and I have successfully closed 19 out of 20 trades for winners!
We’re already looking to extend this winning streak. Find out how you can play this imminent collapse in the bond market. Start by clicking here >>
Japan is a monolithic society, isolated for centuries with a single culture, language and only one ethnic population: Japanese.
While the country is no longer isolated, it remains pretty xenophobic — a psychology of "Japan for Japanese." As a result Japan has virtually no immigration, and relies on imported temporary visa workers.
By contrast, the United States has a growing; diverse population and has, during the past 200-plus years, thrived on immigration.
The United States is currently granting 1.2 million new immigrants’ citizenships every year, and there are an additional 11 million to 14 million undocumented immigrants already living in the United States who may be granted residency and a pathway to citizenship sometime after the 2016 election.
This can help to offset the impact of the retiring segment of the baby boomer generation. That’s because the spending and buying power of as many as 26 million new Americans who can buy cars, homes and consumer goods is at the very heart of the argument for immigration reform.
We’ll let our friends on Capitol Hill sort out the details in the meantime. But one thing we know right now is that …
The U.S. dollar is, and will remain, supreme!
There’s also the fact that the yen is just another currency while the greenback will remain the world’s reserve currency for many decades to come.
Why? We have more bullets!
(My colleague Dan Hassey recently wrote a great article on gold, Bitcoin, the euro, the yen and other currencies putting up a weak fight to become the world’s reserve currency. Click here to read it.)
Our military supremacy is guaranteed; U.S. defense spending, regardless of Congressional Budget Office projections for some decreases, will absolutely break the $1 trillion a year level in just 5 years — assuming, of course, no new large-scale conflicts develop, which would only serve to accelerate the time line.
(In tomorrow’s edition, Dan will talk to you more about what’s going on in Iraq, as it affects energy investors more than defense investors at this juncture.)
Congress has shown a voracious appetite for military spending since the end of the Second World War. That’s not changing.
Being the world’s "Arsenal of Democracy" guarantees U.S. economic dominance and will serve to reinforce the Federal Reserve’s ability to counteract any and all deflationary pressures.
The Fed will continue its accommodative and stimulative policies in coordination with Central Banks around the world.
You know the credo I have been echoing for years?
Don’t Fight the Fed!
The Fed is going to use every trick in their playbook to battle deflation. This will eventually stoke a healthy dose of inflation.
Betting on deflation means you’re betting against the Fed. It’s just not a rational bet.
Japan also isn’t blessed with enormous energy resources.
That’s right — another force working against the deflationary thesis is the North American energy boom taking place right now.
$150 Oil? Here’s What to Do …
Sunni extremists are closing in on the Iraqi capital of Baghdad … American warships are beginning to fill the Persian Gulf … and oil prices are rising day after day.
Depending on the outcome of many different possibilities … $150 oil is NOT out of the question.
So, as an investor you have a decision to make. Will you sit on the sidelines in fear, or will you seize this opportunity for all it’s worth?
If you want the chance to capitalize on this enormous opportunity in the market … and to potentially win 95% of all the trades you make … read this free report now >>
The amazingly vast energy reserves being discovered here in the United States are likely to yield as much as 700 years of domestic energy resources.
On top of that, a huge new export capability will also help us to prevent a deflationary crisis.
Then there’s American innovation and development to consider.
Thanks to old-fashioned American ingenuity, the cost of solar energy has already dropped 50% in the last 5 years. (Click here to learn about a unique opportunity I call "Sun-Gas.")
In the next 15 years, with the accelerating pace of technological innovation taking place, solar energy may well prove to be the cheapest energy source mankind will ever develop.
Cheap energy has and will drive economic expansions.
Just a week ago, I managed to shock my fellow analysts at Uncommon Wisdom Daily during our weekly analysts’ call. I said to expect a modest pullback in the Dow Industrials, S&P 500 and Nasdaq in the coming days or weeks, as the market eases off its wildly bullish sentiment.
Going forward, though, I am in every respect VERY bullish on the U.S. stock market, and I predicted during the analyst call …
Dow 34,000, S&P 4,000 and Nasdaq 8,000!
That’s right — I expect the Dow Industrials, S&P 500 and Nasdaq to all double in the next 3-5 years.
My bullish thesis is based on a belief that the United States is going to enjoy another huge leap in labor and production efficiencies. This will lead to an extended period — perhaps two or three decades — of economic growth.
Human nature being what it is, we’re conditioned by our day-to-day immersion in what’s wrong to buy into doom-and-gloom predictions.
Consider how many TV shows and movies center on the end of the world … or how many politicians rely on fear, and predictions of disaster, to sell themselves to voters.
I think doom-and-gloom can be very entertaining, but it’s not an effective investing mindset.
In fact, it’s not just the stock market that is going up. The ultimate store of wealth, gold, should soar right along with it!
Get Ready for $2,400 and $5,000 Gold!
To buy into predictions of $750 gold, you would have to ignore the fact that the average cost of production "all-in" for gold — is about $1,100 per troy ounce.
You would also have to be willfully blind to the reality that no new major gold mines have been discovered in the last decade.
But there’s more …
I’m bullish on gold and believe it’s likely to make a run to $2,400 while U.S. equities climb during the next couple of years.
I’m one of a very few analysts you’ll ever read who insists that we don’t need a crisis to see gold skyrocket.
We already have a new catalyst to ensure gold’s next run higher …
The days of financial privacy from taxing authorities around the world is coming to an end. The U.S. Justice Department is increasingly knocking down the doors of safe havens like Swiss banks.
If only 3% of the $21 trillion now held in secret offshore bank accounts around the world finds its way in to gold; $2,400 gold will become a reality very quickly.
Then there are the tens of trillions of dollars in new wealth that will be generated by the North American energy and technology boom over the next few years.
If just a small percentage of that flows into gold … it becomes impossibly hard to escape the conclusion that gold could hit $5,000 — without any calamity.
Watching Your Chickens,
P.S. Right now, I’m excited about a brand-new form of energy, one that mixes sunlight and water with an idea that’s ahead of its time. Click here to see why the U.S. government is excited about it, too >>