April 2020 The Great Dividing Line

It is official, the Economic situation we have as of April 2020 will be the defining moment in history. This point in time will represent the “Great Diving Line.” We will from here on in refer to before Coronavirus 2020 and post Coronavirus 2020. The world as we know it has fundamentally changed in virtually every way. And while most people have yet to come to understand, the do know this is a defining moment, they just don’t know yet how profound a time it is. But they will.

This week the March Employment situation was reported, and in the month of March 2020 we had 701,000 new employment claims filed. This is the single largest number ever recorded in United States history, bigger than in the great crash of 2009, greater than the 1927 great crash and subsequent depression of 1927. Yet it will pale in comparison when next month’s Employment Situation report is released, as there will likely be more than 15 million new cases filed.

It’s hard to put this into perspective because what this means is that in just a few short weeks the United States went from arguably the best economy in history, with historic lows in unemployment, in every category, and a stock market that was simply off the hook, perhaps overvalued, but all stock markets are overvalued while they are making all time new highs. Let’s face it, it was a bubble. And then from there we go to the worst numbers ever recorded, which will be followed by even worse numbers on a scale that no one could ever have imagined.

This is the ultimate Black Swan event*. Our country is without doubt heading into a depression. The big question is…can we jump start this economy and get back to some level of working order? I’m not looking for a place like where we were just a few weeks ago, heck, we’re going to see 30 percent unemployment in the new few weeks. The country is on virtual lock down. People are hunkered in their respective domiciles, afraid to emerge, practicing social distancing, knowing they can’t do a darn thing until the threat of the virus has subsided.

Let’s reflect on that. We are in the worst situation, from an economic point of view, than ever in history, and there’s nothing we can do but wait for several more weeks while things get even worse.

The government just approved a $2 trillion aid package, but it’s just a spit in the bucket. Another $19 trillion will be needed just to get people through the few months ahead. When all is said and done, my estimate is that the government will spend somewhere between $50-60 trillion. That is nearly half of the total net worth of the entire country! That would include every business, ever household, every piece of property, every resource…everything.

This won’t just change market dimensions, this will require a whole new market and a new way of looking at how we do business with the world.

I wish that I could sugar coat it in some way, but there is no way to do that. It is nothing short of the biggest bitter pill in human history. Let’s sit back and think about what we are talking about, then posit a way forward. We are experiencing the super trifecta where our monetary, healthcare and financial system are failing simultaneously.

The Coronavirus has popped the bubble. There has been mass liquidation around the world, and a massive rush to obtain US Dollars. The currencies around the world are becoming devalued with respect to the dollar, they realize that the US Dollar is needed to support their own economies…so the USD will become the undisputed de facto world’s reserve currency. Everyone is looking to the United States to lead, but here’s the thing… The United States under Trump is going to do what’s good for the United States FIRST. And every country is going to adopt that exact same philosophy. So in a way, all our allies will be following our lead.

Here Is The Plan

The virus will die down, people will emerge and get back to work. The government will likely create edicts that support the creation of new local or domestic supply chains to replace many of the global supply chains. They will do this for two reasons.

Our country needs to become completely self sufficient so that a future crisis can never again have this effect, and there will be future pandemics or worse.

We must climb out of a great deflationary environment, and creating inefficient domestic supply chains are massively inflationary.

As investors and followers of this service, you should know that we have a plan, and it will be revealed over the coming weeks. It is based on a solid framework that is mostly cash, and 1/4 gold. We will be investing the cash in industry sectors and specific businesses that we will identify. It will take time and big balls, but we will prosper. But before we reveal and enact the plan, here are a few things you should expect.

• False Rebound: The market wants to believe that this calamity is short lived, and it is already showing signs of a rebound, but there is further downside, we have not seen the worst of things yet. It’s not going to be a sharp drop like the one we just had, rather it will be a dizzying, grinding move down that will shake out most market participants. This is where your patience and discipline must shine.
• More Failures: Many funds will go bankrupt, companies will fold, whole sectors may get redefined. This means more volatility.
• Junk will Sink: Anything under AA rated will be re-rated to junk, there will be a major dilution, as companies with weak balance sheets will fail or be absorbed by stronger ones. There will be a great consolidation, which will also present a great opportunity for us.
• Smart Moves: There are going to be many opportunities where stocks will rise, and you will wish you had bought them, only later those same stocks will fall due to liquidity crunches. The secret will be to identify these risers early and get out with a profit before they sink. We will reveal what we call the Free-Ride Strategy that will take advantage of these situations.
• Private Placements: Not everyone will be able to take advantage of these, as it requires that you are accredited. However we will only be doing private placements with companies we believe will be candidates for take-over, and you’ll do well whether you participate in the PP or not.

So this is what you can expect. The next update (expect it in a week or so) will detail the sectors I am interested in and our high level plan for creating a recession/depression proof portfolio, and finding speculative resource plays that will 10X your account.

So, let’s be clear…there will be two kinds of plays we are interested in, investments and speculations. I will be talking about both, from strategic and tactical points of view. I will also publish a separate guide describing the differences between the two. But in general for speculative plays we never commit more than 5 percent of our portfolio, and for investments we never commit more than 10 percent, other than gold.