LETHAL Inflation – Cage Rattling NOW!
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In the 1970’s, inflation spiraled out of control. Many blamed it on Nixon’s decision to take the USD off the gold standard, but inflation is much more complex to explain than through the eyes of just one, singular event.
Many have attempted to explain it and still get it wrong, including renowned Noble-Prize winners, famed economists, and central banking officials and scholars.
The problem is that because most of their theories have been popularized and are used in books, courses, and academia, investors believe in them now and that’s toxic because they base their decisions on them.
Being sincere is not a positive trait, if you’re sincerely wrong, which most are. Einstein once said that 95% of people are wrong 95% of the time, which is why he resorted to independent thinking. Ray Dalio has been successful by understanding this concept and shielding his company from the disease of uneducated opinions by limiting his decision-making process to only the experts, no matter what their rank or seniority in the company is.
For close to a decade, I’ve seen countless “gurus” saying that hyperinflation is imminent, that we should all be 100% invested in precious metals, and that what’s coming is the worst systemic reset ever, but that hasn’t occurred the way the “gurus” believed it would.
Now, many have become cynical towards doom predictions because some have cried wolf for so long, but the truth is that inflation doesn’t occur solely because central banks increase the money supply. There are countless examples, going all the way back to the ancient world of this fact, and you only need to look at Japan to see that fact at play.
Throughout the QE era, where central banks created trillions of new currency units, there were plenty of demands for them. Governments, institutions, and individuals wanted to be cashed up, so that “QE Money” was consumed and held in accounts, rather than spent.
No meaningful inflation transpired – in fact, in many areas of the economy, we saw deleveraging.
Sure, education, rents, and healthcare, for example, are rising in price, but rising prices in some aspects of the economy, is not inflation, necessarily. When ALL prices are rising, that’s real inflation; currently, we’re on the cusp of experiencing that, so we need to guard our portfolios accordingly.
The reason for the inflation, which is now picking up steam, is that after many years, wages are rising. It’s not a large increase, but it’s the most significant one we’ve seen in many years at 3%.
Thanks to global growth, U.S. businesses have to attract more skilled laborers and that’s causing this.
Now, because no one was waiting for inflation to be officially this high in January, the market immediately tanked.
You see, there’s one thing worse than inflation, and that’s Out-of-the-Blue inflation.
Currently, the consensus is about 2%, so if the next release of CPI numbers is above that, the stock market will become a roller-coaster.
Things are changing, and you don’t want to be caught off-guard.
Inflation Hedges: The Complete List
The ultimate inflation hedge is a company, which has the ability to pass on any price increase it is experiencing, due to higher cost of labor and materials, to the consumer, without losing any money.
Indeed, that’s the type of business that Warren Buffett has specialized in.
Wealth Research Group is compiling a list of 5 such companies, which are all well-known and will be some of the best recession-proof stocks in the inflationary nightmare cycle that is coming.
Another important inflation hedge is silver. The quasi industrial/precious metal behaves extremely well when inflation becomes a monetary problem.
Also, mining shares, but only after we see silver, the metal, begin to rise significantly. Silver is the leading indicator for us. Mining shares come next.
Lastly, I want to stress that inflationary pressures will hurt the major indices, but specific stocks, certainly in the blockchain, cannabis, and natural resources industry, will act independently of the general economy, after the initial panic subsides.
Therefore, I intend to hold them, as an ideal hedge.
Blockchain and cryptocurrencies are in hyper growth, as well as cannabis, which is in the midst of a historical legalization period.
Commodities stocks are ridiculously cheap and thrive in environments of rising yields, which are mostly positive for real assets.
Major updates coming – inflation will become lethal.