You might not connect comfortable retirement with a financial crisis, but the truth is there are always opportunities if you know where to look.
Start by asking yourself “what causes a financial crisis?”
A financial crisis is often triggered by one or more of these problems:
- Out of control government spending and debt
- Investment bubbles caused by “easy money” (near zero interest rates)
- Inflation of the money supply
- Loss of confidence in financial or government systems
- Large scale natural disasters
Next, look at what all of these triggers have in common: They feed off of each other. And they all involve money. The first 4 triggers are almost always directly related to fiat currency – fake money that is printed by the government or central bank. Fiat currency, like the US dollar, always has the same fate: eventually it dies.
The last 2 triggers – war and natural disasters – often cause the first 4 because war and disaster damage are both very expensive. They usually cannot be paid for with regular tax revenue. So they print it instead.
This list should look familiar. We are in the middle of most of these triggers right now and have experienced large scale natural disasters recently (Hurricane Katrina, for example).
So what does all this have to do with retiring comfortably?
The answer is in the currency. When a nation’s money dies because of irresponsible practices, like paying debts with more debt, people will flock back to real money. Real money is limited in supply and cannot be inflated by greedy bankers and politicians. Real money is a store of value while fiat currency falls in value from inflation until people lose all confidence in it. Then it dies.
Recognizing real money isn’t difficult. Gold and silver have been used as money for thousands of years – far longer than any paper currency.The opportunity to retire comfortably with real money comes from 2 things:
- As the general population flocks back to real money (when the big crisis hits), demand will skyrocket and so will the “price.”
- Fraudulent practices by commodities brokers, central banks, governments and Wall Street have promised the same piece of gold and silver to several “owners.” When these owners figure out they all own the same piece of precious metals “real estate” and that they have been duped, the supply of gold and silver will plummet and the price will skyrocket.
Let’s dig into each of these 2 opportunities so you can understand why you can retire comfortably just by owning some gold and silver.
The Flight Back to Real Money
The first one is pretty easy to understand. All fiat currencies eventually fail and the US dollar will be no exception. When this process is complete most people will lose everything that is tied directly to the dollar. This includes bank accounts, Wall Street stocks, bonds and mutual funds along with other paper assets like insurance policies.
Barter will work for a time, but it has limitations and will always be replaced by some form of money. For example, it would be impractical for you to trade chicken eggs for a place to live. Barter generally works best with items of similar value.
Most people understand that gold and silver are the answer, so everyone will be trying to get physical gold and silver. The problem (or opportunity) is that the supply is limited, so the old economics law of supply and demand will take over and the value will shoot up until things level off.
At this time in the United States, it is estimated that less than 2% of the population owns any physical gold or silver:
So when the other 98% decide they need to catch up, those that already own physical gold and silver will see their investment climb into the stratosphere.
The Coming Fight Over Who Owns What
Ownership claims for gold and silver by Wall Street investors, banks, governments and customers of some storage facilities now exceeds the actual amount of physical gold and silver by over 100 times. Known as the leverage ratio, the chart below shows how many ounces of gold are claimed by someone on paper forevery ounce in the inventory of the COMEX gold exchange (think of COMEX as the New York Stock Exchange of gold and silver).
What this means is brokers of “paper gold” are selling the same ounce of physical gold over and over to 100+ different people and institutions. Eventually, this fraudulent practice will fall apart when investors demand their gold – and very few will actually get it.
There are two lessons to be learned from the COMEX leverage ratio being so high:
- Don’t own any “paper gold.” This includes Wall Street Exchange Traded Funds (ETFs) like GLD or SLV. In other words, don’t be on the wrong side of the losing argument.
- Do own some physical gold and silver. When investor panic strikes the COMEX, you will be the one that can sit back and watch your real investment turn into a retirement nest egg.
So prepare for the biggest financial opportunity to come along in several generations by getting some physical gold and silver. Then you won’t just be prepared to survive the financial meltdown, you can actually come out of it wealthy and prosperous if you do it right.
The Next Generation of Sin Stocks to Ride Out a Bear Market
While the recent stock market rally has technically pushed the Dow Jones Industrial Average out of a bear market, many investors aren’t convinced it will last.
They expect that once the euphoria surrounding the $2 trillion stimulus plan wears off, the market will resume its slide downward as the economic impact of the coronavirus takes hold in the next few quarters.
Sin stocks, so named because they are things that we should go without but can’t seem to part ways with, are historically a great investment during downturns.
The added stress and uncertainty means an uptick in business for the companies producing these sinful indulgences.
Things like alcohol, cigarettes, weapons and gambling all fall under the umbrella of sin stocks, so companies like Altria (NYSE:MO), Diageo (NYSE:DEO), Sturm Ruger (NYSE:RGR) and MGM Resorts (NYSE:MGM) are all widely considered to be sin stocks.
And while they can make great investments during times of uncertainty, there’s a new breed of sin stocks that could generate even larger returns over the coming months as Americans turn to their (new) favorite vices.
Here’s a short list of “next gen” sin stocks that we expect to do very well.
While this is by no means a “new” vice, it is only in the last few years that it’s been possible to directly invest in companies that produce and sell marijuana. That wasn’t possible during the 2008 financial crisis, so it will be interesting to see how the major players do during their first economic downturn.
Just like smoking, we expect demand to hold up very well, if not increase, during times of turmoil.
Consider the larger companies like Canopy Growth (NYSE:CGC), GW Pharmaceuticals (Nasdaq:GWPH) and Cronos Group (Nasdaq:CRON).
Being a “gamer” is a lifestyle now, with livestreaming on YouTube and Twitch and professional Esports leagues formed around the most popular titles like Call of Duty and Overwatch.
Video games are big money now, and the larger production studios will continue to generate massive revenues as the culture grows in the years ahead.
Look at the big studios with strong franchises like Activision Blizzard (Nasdaq:ATVI) which has the Call of Duty and Overwatch franchises and Electronic Arts (Nasdaq:EA) which has the Madden, Battlefield and FIFA franchises.
Social Media Platforms
If you have a child or grandchild under the age of 30, you are probably very aware of the effort it takes to get their attention away from their phones and all the social media apps or platforms that they are using.
Tik-Tok, Twitter, Facebook, and Instagram are all designed to keep users engaged and spending as much time as possible on their platforms. The publicly traded ones are Twitter (NYSE:TWTR) and Facebook, which also owns Instagram (Nasdaq:FB)
While there are no guarantees when it comes to investing, as the coronavirus causes more people to spend time at home, they’ll be spending more time using the products and services of these next generation sin stocks, and that should translate to more revenues and higher profits for the companies.
Dow and S&P Post First Back-to-Back Gains Since February
While it may be a small victory, the Dow Jones Industrial Average and the S&P 500 managed to post their first back-to-back positive days since February.
The Dow closed 2.39% higher, gaining 495 points to close at 21,200. The S&P was up 1.15%, closing 28 points higher at 2,475.
The Dow was helped by a massive 24% rally in Boeing shares and a 9.2% gain for Nike stock.
The Nasdaq slid 0.5% yesterday as the tech-heavy index saw Facebook, Amazon, Apple, Netflix and Alphabet all close in negative territory.
Stock gave back part of their gains right before the market closed when Presidential hopeful Bernie Sanders said he was ready to “put a hold” on the $2 trillion stimulus bill currently working its way through the Senate.
Sanders is looking for tighter restrictions on companies receiving aid from a taxpayer pool of $500 billion.
While the market has used the likely passage of the stimulus bill as a catalyst for the massive rally over the last two days, at least one investor says the stimulus is reassuring Wall Street, not Main Street.
“What the fiscal and monetary stimulus has done is to allow the market to recover,” said Justin Hoogendoorn, head of fixed income strategy at Piper Jaffray in Chicago. “It’s not because the main street community is coming back. It’s the institutional crowd being able to say, ‘the world isn’t falling apart’.”
Others are worried that the euphoria over the stimulus bill is driving the market higher in the same way it originally drove the market down.
Adam Crisafulli, founder of Vital Knowledge, said in a note:
“The stimulus measures will continue acting as equity tailwinds as they seep into corners of the credit market presently locked.”
But he added that the market “is clearly moving much faster than underlying fundamentals and just as sharp declines on prior sessions exaggerated economic conditions, the rebounds will too.”
On Wednesday, former Federal Reserve Chairman Ben Bernanke said that he expects the U.S. economy will have a quick rebound after a “very sharp” recession.
“If there’s not too much damage done to the workforce, to the businesses during the shutdown period, however long that may be, then we could see a fairly quick rebound,” Bernanke said while appearing on CNBC’s Squawk Box.
He added “This is a very different animal from the Great Depression” which he said “came from human problems, monetary and financial shocks. This has some of the same feel, some of the feel of panic, some of the feel of volatility that you’re talking about. It’s much closer to a major snowstorm or a natural disaster than a classic 1930′s-style depression.”
In order for the markets to avoid a “snowstorm” turning into a recession, Peter Oppenheimer, chief global equity strategist at Goldman Sachs, said there are four “components” needed for stabilization:
″(i) A sign that the policy intervention is sufficient to prevent severe second- and third-round economic shocks; (ii) A sign that the infection rate is reaching a peak; (iii) A sign that the economic downturn may be slowing; and (iv) Cheap valuations,” Oppenheimer wrote in a note to clients. “In reality, we believe it will be a combination of these, and in some cases there are already signs these are in place.”
Stimulus Checks: How Many Months Until Payments Go Out, and What Could You Receive?
Millions of Americans will receive direct payments from the federal government thanks to a $2 trillion federal funding package that was agreed to early Wednesday morning.
The bill, which could be signed by President Donald Trump later Wednesday, is in response to the coronavirus pandemic, which has shuttered non-life sustaining businesses nationwide and led to thousands if not hundreds of thousands of new unemployment claims.
Here are the details you need to know about when, and how much, you might receive.
When will the money go out?
According to CNN, relief may still be a couple of months away, as the outlet reports that checks or direct deposits might not go out until May.
“First, the IRS will have to calculate each person’s payment amount,’ CNN writes. “Then, it will need the correct direct deposit information or mailing addresses.
“To get the money to people who don’t usually file tax returns, it might have to request that information from the Social Security Administration or Veterans Affairs. In 2008, those people were required to file a return anyway in order to get their rebate.”
That, of course, will take time, and keep in mind that the IRS is still receiving tax filings, as well, even if the federal government and also Pennsylvania, among many other states, have pushed back the deadline to file.
For those looking for an optimistic timeline, mid-April seems to be the absolute earliest that checks could go out.
More: Pa. unemployment claims skyrocket to 540,000 since statewide coronavirus shutdown, shattering records
How much will I get?
Here is what the New York Times says:
“A $1,200 payment for each adult — and $500 per child — in households that earn up to $75,000 per year for individuals or $150,000 for couples. The assistance phases out for people who earn more.”
CNN has more details on what the phase-out threshold might look like.
“The payments would start to phase out for individuals with adjusted gross incomes of more than $75,000, and those making more than $99,000 would not qualify at all,” CNN writes. “The thresholds are doubled for couples.
“Qualifying income levels will be based on 2019 federal tax returns, if already filed, and otherwise on 2018 returns.”
What happened the last time this happened?
This package marks the third time since 2000 that the federal government has approved payments to citizens based on special circumstances.
As CNN notes, it took six weeks for checks to go out under a 2001 plan for tax rebates that were authorized by then-president George W. Bush. Checks during the ‘Great Recession’ of 2008 didn’t go out for three months, however.
Experts believe that an increase in electronic tax filing and the use of direct deposit for refunds could lead to expedited payments this time around, and those who have that set up are likely to receive their money faster than those who will be waiting on a check.
More: These central Pa. businesses are still open during the coronavirus pandemic
Where is the money coming from?
Syracuse.com has details:
“Taxes, essentially,” its Geoff Herbert writes.
“CNBC reports it’s unclear whether the money will be considered a loan or a gift, in which case some of it may have to be paid back.”
Why only one check?
Previous proposals that were discussed as the spread of COVID-19 continued to hurt the economy mentioned the possibility of two checks being sent out, but the agreement reached Wednesday calls for just one. It’s possible that a second round could go out, however, if schools and businesses must remain closed into the summer.
How will businesses be helped?
This part of the package is still being finalized, but Yahoo reports that the Small Business Administration will handle some requests while a new, still-to-be-named agency will handle others, likely for larger businesses and corporations. It was referred to as ‘a big credit facility’ by Pennsylvania senator Pat Toomey over the weekend.
“The facility will have two components: One will be administered by the Treasury Secretary with direct loans for a short list of “seriously distressed and absolutely essential companies,” likely including airlines,” Yahoo writes.
“The second component will be much bigger and be “a broad-based credit facility that will be available across categories, across sectors and industries.” Toomey said this program will give loans that will have to be repaid. “None of this is grant money,” he said.”
More of PennLive’s coronavirus coverage:
Why social distancing works, as demonstrated with Skittles
Pa. school districts prepare for possibility of students not returning to classrooms
Governors, still trying to flatten the coronavirus curve, balk at Trump’s Easter Sunday timeline
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