Stocks are up.
We’ve told you to take some profits… Add more to your cash position.
It’s not that we figure there’s a big crash coming… it’s just that we can’t be sure – in which case, it’s better to be safe than sorry.
But as far as this other asset is concerned… even though it’s high, too… we say don’t sell, buy.
Why the contradiction? We’ll explain below…
It’s Part of the Plan
The story from yesterday’s Financial Times will help us put our story in context:
The recent uptick in U.S. inflation appears to have reversed any progress President Joe Biden has made in convincing voters he can do a better job of managing the economy than Donald Trump.
The poll, conducted between May 2 and May 6, finds that – after a slight uplift in April – Biden’s approval ratings on the economy fell back to levels that will make for depressing reading among the White House’s incumbents. That comes after price data showed U.S. inflation might prove stickier than anticipated at the start of the year.
Yes. That’s right. Inflation is still here.
It’s not going away.
Of course, the mainstream press will have you believe the government and Federal Reserve are doing everything in their power to stop inflation.
If only that were true.
As we’ve repeatedly explained to you, high inflation is intentional.
The U.S. government is in so much debt. And with interest payments on that debt so high, the only solution to prevent the U.S. from defaulting on repayments is to inflate the debt away.
Not that the debt will actually go away… rather, it will allow the government to repay its older debt obligations with today’s devalued dollars.
A win-win for the government. There is a downside. That is, once they start this process, it’s almost impossible to stop it without causing a major shock.
The plus side (they hope) is they can push the problem further into the future, rather than facing the consequences now.
That’s why one of our favorite assets has performed so well over the past five years. And it has done so without much fuss.
We refer to gold.
Today, it trades around $2,350 per ounce. This time five years ago, it was around $1,280 per ounce. So it has nearly doubled in that time.
Coincidentally, the gold price has almost exactly matched the performance of the S&P 500 over that time. Both have nearly doubled from their mid-2019 levels.
Just note, this isn’t a choice. This isn’t a case of stocks or gold… this is a case of stocks and gold. Remember, we aren’t telling you to sell all your stocks.
We merely recommend cutting some of your exposure. Taking some of the proceeds to put into speculations in case the market continues to move higher.
Most of the proceeds should go to cash, but not all of it. Aside from speculations and cash, it’s hard to think of a better asset than gold.
If we’re right about inflation staying high, we bet the gold price will quietly creep higher too. Just as it has done for the past five years as it has quietly doubled.
It wouldn’t surprise us if it just as quietly doubled over the next five years too.
Cheers,
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Kris Sayce
Editor, The Daily Cut