Between 2011 and 2015, the price of gold and silver was declining, though worldwide, investors were expressing their concerns about the global economy. What made this possible was currency creation. Since investors knew that central banks are doing everything in their power to prop up stock prices, most put money in the market.
But now, the stock market is overpriced in a manner only seen before the greatest bust in our history.
The last time all three indices were at all-time highs together, it was preceded by the Dotcom bubble bursting. Not only that, but by historical measures, QE programs, negative interest rates, and inflation targeting have caused the S&P 500 to be as overvalued as it’s been only three times in its history.
Outflows from mutual funds have been growing the last year and are increasingly getting more rapid. What are driving the markets higher are companies buying back their own shares and the central banks that are buying stocks with currency they create – this is unheard of. The Bank of Japan now owns 10% of the Nikkei 225 and 55% of Japan's ETFs.
Investors then moved their liquid cash from stock proceeds into bonds, but today, a whopping 33% of the world's bond market is paying negative yields. This is causing a bond bubble that will have dire consequences for entire nations and cause civil unrest, as pension funds won't be able to provide returns to income-starved retirees.What's important to understand about credit expansion is that it only generates a stimulus when the economy is robust. If the economy is slowing down, it's the equivalent of pushing a huge stone up a mountain slope – the more people that are pushing (or currency being created), the more people die when the stone rolls back down on them and crushes them (or the economy enters a severe recession).
What shows best if an economy is going into a recession (or worse) is the change in tax receipts. Notice how accurately it reflects the worst downturns we had in our economy, and notice how we are clearly entering one today.
That's why Carl Icahn, for example, has indicated that he is the most bearish he has ever been. Considered the world's 3rd best-performing investor of all times, he is known for being direct and and straightforward. His interview on Bloomberg left no room for guess – he is bearish and concerned. Many other billionaires have recently filed their public holdings and own GLD or other related gold investments.The challenge that a fund manager like him has is he can't tell his clients he is buying physical precious metals because they would not agree to these types of creative trades. So we, as individuals, have a tremendous advantage over bureaucratic institutions. Carl has increased short positions and lowered his exposure to U.S. stocks big time.
Meanwhile, gold and silver stocks have finally experienced a natural correction, and this has triggered a fantastic buy alert for a company we have researched thoroughly. These recession worries are frightening all the novice resource investors and it leaves us, the savvy few, in a great spot to capitalize on uncontrolled emotions that cause others to make mistakes. We are finalizing our due diligence right now, and we are truly excited by this stock.
I will have all the details for you shortly.