What to Do Now That the “Everything Bubble” Has Burst

Chris Lowe

Welcome to this week’s edition of the Friday mailbag.

I (Chris) have been asking Legacy Research analysts for the biggest threats and opportunities they see right now.

Today, I want to share some of those with you.

I’ll also run more of your emails about the ramp-up in digital mass surveillance we’ve been seeing in the wake of the coronavirus pandemic.

Now, on to three fundamental questions I had for our analysts…

1. What’s the biggest threat to readers’ wealth right now… and how can they neutralize it?

2. What’s the biggest opportunity that the panic has put on your radar?

3. What advice can you give folks for staying healthy and avoiding going crazy in a lockdown situation?

Casey Report editor Nick Giambruno sent these answers back from Cafayate in Argentina, where he’s weathering the storm…

The biggest threat to your wealth is clearly government.

Whether it’s the central bank stealing purchasing power from savers by inflating the currency… or imposing increasingly confiscatory taxation or business-stifling regulations… nothing comes close to the amount of wealth destruction governments unleash.

The coronavirus is a perfect case in point. The direct wealth destruction unleashed by the virus itself is peanuts compared to the subsequent actions of government. 

What to do about it? There are two crucial things everyone should think about doing… 

First, own hard assets that governments can’t confiscate by inflation. Examples include physical gold, bitcoin (make sure you control the private keys), and ideally foreign real estate.

Second, structure your life and your business to mitigate taxation not just for today, but for what future taxation might look like. 

Regarding the biggest opportunity, I think it’s too early to tell at the moment. The “everything bubble” just burst. We are way closer to the top than we are to the bottom, and I suspect the pain is just getting started. I don’t see real signs of desperation and blood in the street yet. That being said, opportunities in oil stocks are starting to look enticing. 

My best advice to avoid going crazy in a lockdown is to stay physically fit. One way to do this is the so-called “Prisoner’s Workout.” This is based only on bodyweight exercises – sit-ups, push-ups, air squats, etc. – performed in limited space.

Nick’s been on a roll lately. He recommended Walmart (WMT) to our Casey Report readers in May 2018.

It was primarily an inflation hedge against rising money-printing. Nick’s thesis is simple. Money-printing… and the inflation he believes it will lead to… will crush the middle class.

Fewer people will be able to afford to shop in Whole Foods. More people will starting availing of Walmart’s cheaper prices.

So far, that’s worked out perfectly. As the broader stock market has struggled in the age of COVID-19, Walmart shares have surged to new highs.

And Casey Report folks who followed Nick’s recommendation are up 58%.

Readers of Nick’s elite Crisis Investing advisory have had the chance to do even better.

Last August, Nick recommended they profit from higher gold prices by buying call options on gold royalty company Franco-Nevada Corporation (FNV).

After gold’s recent surge, these bullish bets are up 230%.

I also reached out to Legacy’s resident “rock hound” (geologist), Dave Forest, with the same three questions I asked Nick.

Dave heads up our International Speculator advisory. It’s all about profiting from rising commodity prices. Here’s Dave’s response…

The biggest threat is probably being over-eager. The drop has happened; there’s nothing we can do about that. But there’s a real itch to “buy the dip.”

So far, that’s paid off. The S&P 500 – a bellwether for the U.S. stock market – is up 27% from its low. But I suspect buying the dip could be a mistake. Be aware another drop, or several, could happen before this is done. 

As for opportunities, gold is near and dear to my heart. And it’s usually the go-to investment in times of crisis. I made a lot of money in the sector in the wake of the 2008 crash. Right now, gold stocks are handily outperforming the wider stock indexes. 

The lockdown makes me think of that quote… It goes something like this: “The failure of most people is their inability to sit quietly in a small room alone.”

Spending time with your closest thoughts can be an intimidating, downright frightening experience. But ultimately, a very fruitful one. Don’t despair. Maybe this will even be a pivotal turning point for some.

Longtime readers know we’ve been warning about the threat to your civil liberties from digital surveillance.

And on Wednesday, our tech expert, Jeff Brown, revealed how all new smartphones will have “contact-tracing” software built in.

This means your phone will track not only where you are… but also who you come into contact with. The system uses the same Bluetooth connection you typically use to connect your smartphone to a remote device such as a speaker.

And it’s set alarm bells ringing…

Hell no, it’s not OK for the government to be tracking us under the guise of coronavirus tracing! Next thing we know, if we happen to be in contact with someone the government deems a “terrorist” or a “criminal,” we could be prosecuted by association.

I will never download that app. Slippery slope? We’re already halfway down the slide!

– Judyth H. 

Our privacy is way too dear a price to pay for security. I hope that the “sheeple” will shed their blinders and rise up against an increasingly oppressive government.

– Carolyn E.

We have already given up our right to privacy. And I don’t believe we have a chance to ever get it back as long as we participate in our society. The governments are in complete control of society worldwide. Some see it as progress, and it has benefits, depending on who has the power.

If past human behavior is a source of future projections, we cannot ignore the fact that a despot somewhere in our world will gain force and try to control our world, which will be in a lockdown state with very rare avenues of escape. Freedom and privacy will not even be a memory to the coming generations.

– Michael S.

I do not want the government spying on me. It is corrupt enough already. I prefer to deal with a greater level of “risk” in my life than deal with the government’s “security and safety.” It is not even capable of offering security and safety.

Think of all the locked-up prisoners who are raped, beaten, abused, and stabbed on a daily basis in our nation’s jails and prisons. How is the government’s guarantee of safety working out for them?

We all need to look out for ourselves, our families, our parishes, and our chosen teammates. The government ain’t here to help. Gold, guns, and gardens are the answer as far as I am concerned, not government. Live Free or Die!

– Devin S.

But some of your fellow readers say it’s possible to have smartphone contact-tracing without having to give up your freedom…

Contact-tracing is necessary and important to combat this crisis. That said, the software can be designed for Big Brother or for the collective. Here are the requirements in the collective’s interest:

1) The software must be open-source so that the source code is freely available and examinable by anyone. This avoids ulterior motives.

2) The software must be voluntary. We must be able to turn it on or off; we must voluntarily report our condition and voluntarily seek status. This keeps us in control.

3) The software must be encrypted and anonymous; only the keyholder can know the contents of the information and only the keyholder can reveal their identity. This keeps us hidden.

4) The software must be decentralized and peer-to-peer. That is, only people immediately local to you need to know your anonymous status. This limits data propagation.

5) The software must be simple and well-documented so that it may be easily investigated by non-programmers.

Of course, this is not what “they” intend. But perhaps with your connections, you can make this known and someone may listen.

– Michael S.

Maybe you distrust Apple and/or Google. Maybe you have reason to. But if their tracing app works as it is described, it will preserve privacy.

It is stated that if two phones are close to each other (within Bluetooth range of 300 feet) for a period of time, the phones will exchange anonymous IDs. Your phone will get the other phone’s ID and vice versa. No database will get either.

So your phone will store, for instance, that your phone was near Phone 176087. You won’t know where or when or who was involved. Now suppose the owner of Phone 176087 is diagnosed with COVID-19. That person will, presumably after safeguards against falsely and intentionally spreading panic, enter that fact.

The ID will be broadcast, and your phone will receive the broadcast, check its internal IDs, and alert you that you were close to someone who now has COVID-19. You can see a doctor or take any other action you find appropriate. No authority will be able to send a police cruiser for you, since no authority will know you were near a COVID-19 carrier.

It’s possible the app could upload the time and place of every encounter to a server or send an alert when a phone finds a match. But if that were the intention, why not just secretly do it without saying anything about an app?

– Bob B.

Keep an eye out for more from me on this important topic in future dispatches.

Will you be downloading the new “contact-tracing” app? Do you agree with (the second) Michael and Bob that it’s possible to pull off without infringing on your privacy?

Write us with your thoughts at [email protected].

Regards,

Chris Lowe
April 17, 2020
Dublin, Ireland

P.S. Don’t forget to download your print-out-and-keep copy of Legacy Research’s Coronavirus Crisis Playbook.

It lays out timeless strategies for protecting – and growing – your wealth in a crisis. For example, you’ll learn from Teeka Tiwari why it’s crucial to follow a simple asset allocation strategy heading into… and out of… a crash. You’ll learn all about the best time to jump back into stocks after a plunge. You’ll also learn from Legacy Research cofounder and legendary speculator Doug Casey how to identify best-in-breed gold stocks.

Download your free copy here now.

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