Wealthion Conference, what the experts are thinking for 2022

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Bill’s Blog | February 23, 2022

Firstly, I want to thank a good friend, James Longstreet (fellow financial advisor), for providing the conference summary after taking extensive notes so we can all benefit from this timely information.

The Wealthion Conference took place on January 22, 2022, and was hosted by Adam Taggert, the founder of Wealthion.com. Adam is a regular contributor to financial insights and education, and he interviews brilliant people every week. Please check out his Youtube channel. Adam brought together a wide range of seasoned experts, from economists, portfolio managers, commodity specialists, real estate and cryptocurrency analysts. The goal of the Wealthion conference was to provide a Macro level overview of the economy and an outlook for 2022. Also, to provide some solutions for protecting and growing your capital in 2022, given the current economic environment. Remember, all investments have risks. Therefore, I recommend you educate yourself before making any investment decisions.  

I would be happy to discuss any information shared below with you and answer your current financial plan questions. So let’s see what the experts are thinking.

#1: Lacey Hunt – Former Senior Economist at Federal Reserve: Deflation Still Reigns

3 point summary & challenges to the restoration of normal:   

  1. When the pandemic hit, we had a large debt overhang, and this overhang is even worse today. Every dollar of new Debt produces less and less GDP. For example, between 1870 and 1997 in the US, every new dollar of Debt added 62 cents of GDP, and now we are down to every new dollar of US debt, adding just 25 cents of GDP.    
  2. Our monetary authorities introduced a program of revolutionary design (modern monetary theory – 5000-year low-interest rates – money printing), which has never been tested in the past.    
  3. Demographics in the US are deteriorating. In 2021, the US population increased by just 0.1%. This number is the smallest increase since the founding of the US in the 1800s. The total net increase in population in the US was less than 1 million for the first time since 1937.   

#2: Jim Rickards – Editor of Strategic Intelligence Newsletter: Investing for Disinflation 

3 point summary:   

  1. Disinflation is still inflation, but prices are going up slowly. We are currently at 7% inflation year over year, the highest in the US since 1982. Jim expects disinflation in the near term and uses the analogy of a ball thrown up into the air; as it approaches its apex, the rate of climb declines.
  2. What matters is the breakdown in the global supply chain. Most people in North America had their 1st encounter of this in March/April 2020 due to hoarding of toilet paper, for example, but the majority of the rest of the shelves were full. That’s not true today; there are more and more bare shelves, so the supply chain problems are real, and they are not going away.   
  3. Proper diversification is not having diversification within one asset class, all in stocks. Proper diversification is having some stocks, some gold, some real estate, some cash, some alternatives; these asset classes are not highly correlated:    

#3: Jim Grant – Publisher of Grant’s Interest Rate Observer: Interest Rates How High?

3 point summary:   

  1. FED is projecting three rate hikes in 2022. What is pressuring rates higher is the expectation of a less accommodative monetary policy and inflation at 7% year over year in the US. Rates have been so low for so long that we’ve had negative interest rates for the first time in 4000 years over the last few years. It’s a tumultuous time in money.
  2. With rising inflation, the FED is planning to raise rates and slow money printing, and in this process, they may spark a market correction/crash, so don’t be surprised if they flinch and reverse course.
  3. It is a terrific time to own Gold. “I think one owns it, waits for the inevitable tendency of paper or digital currencies to lose value, and the tendency to leverage credit structures to weaken and sometimes crash. The inevitable tendency of people to search out stores of value that have proven themselves over time, all of these tendencies are coming together, and I think we are set up for a substantial new bull market in Gold.”  

#4: Luke Gromen – Macro Analyst & Founder of Forest or the trees: Inflate or Default

3 point summary:

  1. In a world drowning in Debt and forced to deal with rising rates to fight inflation running at a 40 year high. The powers that be have to get busy inflating or get busy defaulting. We are witnessing the common playbook of over-indebted governments, inflate or default. Inflation is the more likely scenario.
  2. China uses the Eurodollar system to buy up and control many world’s assets (ports, stocks, commodities). Once they’ve used their Eurodollar system to control enough of the physical world, they can impose their will (shortages). Supply chain disruptions are going to last longer than people think.
  3. Given this environment, Luke Gromen favours investments like energy, copper and other metals required for the supply chain, especially Electronic Vehicles (Silver) and Gold and Bitcoin as a neutral reserve asset. 

#5: Lance Roberts – Chief Investment Strategist of RIA Advisors: Where are Markets Heading in 2022?

3 point summary:   

  1. FED is in a difficult position with inflation raging. They need to raise rates and reduce their money printing; however, the FED will not be able to raise rates nearly as much as they think in 2022.   
  2. The word for 2021 was “inflation,” and I think the word for 2022 will be volatility, both upside and downside. If market correction goes beyond 20%, there is a considerable risk of margin calls, which could crash the market further, closer to 50%. And would have many other adverse effects, including possibly systematic risks to the banking system. If the correction is approaching 20%, the FED may change its policy. As in the past, step in and rescue the markets.   
  3. Over the last ten years, investors have been conditioned to know not to fight the FED (as long as they are printing money, the markets will rise) and buy and hold, set it, and forget it. In 2022 investors will have to be much more nimble.   

#6: Former Dallas FED Advisor Danielle DiMartino Booth & Fund Manager Brent Johnson:  

The FED & Dollar

3 point summary:

  1. FED is planning at least three rate hikes in 2022, and they are hoping that no big shocks interrupt their plans for these rate hikes. Regardless of how many rate hikes are implemented by the FED in 2022, volatility will be higher this year. The chances of a correction in the stock markets are high; At the same time, it’s unlikely the correction exceeds 20%, 20% is certainly possible. Even if this happens, equities may end in 2022 higher, even with a correction along the way.   
  2. Over the last 25 years, the USD has risen in all financial or credit crises because the entire world economy is levered to the USD. When asset prices drop, the collateral rises, and the underlying asset is the dollar. So I don’t think it’s different this time, if we have some contagion effects in sovereign markets, there’s going to be a crisis, and when a crisis happens, I think the world, even though they may hate to do it, will flock to the USD. On a relative basis, I think the USD outperforms other currencies.   
  3. Given the environment we are in, having diversification into several asset classes, including Gold, cash, real estate (however, be careful with new entries into real estate because there is enormous leverage in the system). Both Danielle and Brent favour municipal bonds as well.  

#7: Hard Asset Experts Rick Rule and Tavi Costa: Hard Asset Investing 

3 point summary:

Key reasons why Commodities and Natural Resources will perform strongly in the years ahead are first four decades of money printing will cause nominal prices to rise. Then, as the population increases, demand will increase against a backdrop of three decades of underinvestment in productive capacity in commodities. 

  1. And even if no significant demand accelerators are moving forward, we will have supply scarcity in certain vital commodities.    
  2. Looking back to inflationary decades, like the 1910s, 1940s, and 1970s, we saw commodities outperforming equity markets, so it’s creating a very positive and bullish setup for commodities.

According to Rick Rule, taking a broad view of the natural resources sector, energy, precious metals, agriculture, water, the most significant opportunity lies in precious metals. 

  1. In his 50 year career, Rick has never seen a period where the net present value from future cash flows at current commodity prices has ever been as cheap as today.     

 #8: 

Jeff Clark – Senior Analyst at GoldSilver.com: Where Next For Precious Metals?

3 point summary:

  1. Central Banks are net buyers of Gold – In 2021, the first half of the year (Jeff did not have the data for 2nd half of the year yet) was the 3rd highest in 10 years of Central Bank Gold buying. Also, FED rate hike cycles are historically good for Gold.
  2. Retail demand for Gold is strong and growing. In 2021 the US Gold Eagle sales level from the US Mint was the highest in 10 years. India Gold imports hit a record $55.7 Billion in 2021
  3. Hints from the mining industry include Gold exploration budgets up 43% in 2021, Junior company financings were the highest since 2012, and there are over 200 more Gold exploration companies in 2021 than in 2020. In Jeff Clark’s opinion, the Gold uptrend kicks in in 2022 or 2023 at the latest, and Silver will trail at first but surpass Gold before the bull market is over.

#9: Jeff Clark – Senior Analyst at GoldSilver.com: 

The “GDXJeff” Mining Stock Picks

3 point summary: 

Gold & Silver stocks have never peaked at historically undervalued levels, and today, miners are trading at one of the cheapest multiples ever. Mining companies tend to issue massive amounts of shares at the top of a cycle, and today we are experiencing the opposite. So the #1 question is, do Gold & Silver rise?  

  1. Miners follow metals up and down with leverage, so if we believe Gold & Silver will rise, we have strong assurance that mining stocks will rise.
  2. GDX Junior basket of 102 stocks vs. GDX Jeff Clark basket. Over three year period from 2019 to 2021, the GDX Junior basket is up 42.4%, and Jeff Clark Portfolio is up 255%. Jeff recommends buying the whole basket of precious metals stocks if you decide to participate. Jeff again believes he will outperform the GDX, and the clock starts January 24, 2022, and ends January 24, 2023.   
  3. GDX Jeff Basket:  

Silver Producer Poised to Pop

First Majestic Silver (AG).

Pre-Producers with Rerating Potential:  

Ascot Resources (AOTVF), Artemis Gold (ARGTF), Marathon Gold (MGDPF).

Explorers Growing a Resource

Cassiar Gold (CGLCF), GoGold Resources (GLGDF), Maple Gold (MGMLF), Blackrock Silver (BKRRF), P2 Gold 

(CTIMF).

Potential High Flyers: Stelmine Canada (STHFF).

#10: Ivy Zelman – Housing Analyst (Zelman Associates): US Real Estate Market Outlook

3 point summary:   

  1. The current assessment of the US Housing Market is that it’s incredibly robust and not sustainable, we’re probably at a peak, and we will likely see moderation somewhat contingent on what mortgage rates do. If rates stay where they are now, the market can run hot at these levels longer, generally due to the constraint (supply chain) on the total new supply coming and all the free money that’s driving this robust activity.
  2. US house prices were up almost 20% in 2021, mainly due to the free money and the low mortgage rates. Current new development in single-family and multi-family is happening at a furious pace. Eventually, you will go from scarcity to a glut in the US market.   
  3. Considering the FED is planning to raise rates, current affordability levels and pace of new developments will slow. However, Ivy doesn’t see the same amount of cyclical risk as in the 2008 US housing crash; she advises exercising caution for the overall broad US market, with some exceptions depending on local market conditions.   

#11: Craig Wichner – Founder of Farmland LP: Investing in Farmland 

3 point summary:

  1. Farmland in the US is an excellent comparison to Commercial Real Estate. There’s $3.2 Trillion of Farmland in the US, similar economic value to all the US apartment buildings and all office buildings in the US. 54% of US Farmland is currently leased, so Farmland in the US is Commercial Real Estate just like other asset classes.   
  2. Since 1995, Farmland in the US has outperformed the S&P 500 and Farmland delivers high returns over time.   
  3. As a hedge against inflation, between 1970 and 2020, Farmland has on average delivered 6.1% more than the inflation rate in the US.    

#12: Stephen McBride – Chief Analyst at Risk Hedge: The New Crypto Frontier

3 point summary: 

  1. We believe that Blockchain Technology is the most important invention since the internet. It just so happens that the first use of this technology was cryptocurrencies, as all crypto assets operate on unique Blockchains.

Today there are real businesses with actual products and cash flow. We refer to this as Phase 2 Cryptos. An example is Uniswap, which operates like a stock market for Crypto built on the Blockchain. However, instead of stockbrokers controlling everything, it runs on Blockchain and runs by smart contracts, a clever computer code that can hold/send/receive money.  

  1. Approx, $59 Billion of trades, passed through Uniswap over the last month, and it’s generated approx $1.5 Billion in revenue over the last year.  
  2. Using the analogy of a Baseball game, Stephen believes we are in either the 1st or 2nd inning of the Phase 2 Crypto story. About 30 years ago, most people were very skeptical about commerce on the internet, which is similar to where we are today with most people’s mindset about Crypto, as many people believe it’s super speculative. None of these crypto businesses make money. Our view is that a 5% allocation to Crypto is prudent and that your allocation cannot be zero.   

There you have it, another brilliant conference which provides a wide range of ideas to investigate. As always, please reach out to me if you need a second opinion on building and protecting your wealth. 

Our world is becoming more and more unstable due to incompetent leaders and conceivably outright corruption and deception. In the World Outlook Financial Conference, Keynote speaker Martin Armstrong noted, “people are losing confidence in politicians, media, the Fed, the financial system.” 

Finally, the world and Canadians are slowly waking up to the fact that you need moral, honest and competent people running our country and significant institutions. Canada is in serious trouble right now, and we need to stop the division, stop being fearful, and expect our leaders to be servants of the people and not driven by agendas. We are all losing the Canada we love, and I say this with great sadness. But, if we all do our part to bring change, there is still hope.

Bill Westmacott, Owner

fivefoldfinancial.ca

Financial Education & Honest Solutions Create Success

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