What the Wealthiest Americans Are Doing With Their Money Today
What the wealthiest Americans are doing with their money today... 'The economy is in a twilight zone'... The move into gold is accelerating... Sjuggerud: A simple, powerful gold strategy you can use right now...
What are many of the wealthiest Americans doing with their money today?
If a recent report from financial-news network CNBC is any indication, the answer is "not much."
The latest CNBC Millionaire Survey, conducted last month, showed the group is increasingly uncertain about how to invest today. Less than half of those surveyed believed stocks would end the year in positive territory... while more than half thought the value of their savings and investments would not improve this year.
Tom Wynn – director of research at Spectrem Group, the firm that conducted the survey – summarized the results in simple terms: "People are in a wait-and-see mode and won't do a lot of investing."
Ron Carson, founder and CEO of high-net-worth-focused Carson Wealth Management, said his "massively wealthy" clients are also concerned. As he explained to CNBC...
The general consensus... is that the economy is in a twilight zone. No one really understands it. We are in another world. We don't know what is real...
The Fed has pushed things to such an extreme with rates, and there are negative rates around the world... Investors look around and are not sure what to do.
They hate sitting on cash yielding zero but don't want to take too much risk right now... If the market takes off, they are content to not catch it. They don't want to give back a big chunk of principal if the market goes south instead.
But they aren't just worried about the economy and extreme central-bank manipulation. The report said many of the country's wealthiest folks are concerned about the upcoming presidential election like never before. Wealth manager Karen Altfest explained...
I'm used to getting a lot of calls about the state of the economy, but never so many about the elections. People are uncomfortable with the level of rhetoric. We used to not even talk about elections...
They aren't giving up on one risk to take another. They are just saying, "Get me out because of the economy and election." Nobody ever wants to give everything back, but now they don't even want the risk of $100,000 going to $99,000.
So... what are folks like Carson telling their high-net-worth clients to do? The answer will sound familiar to regular Digest readers...
It's the craziness of irresponsible central bankers and how it all ends that will drive the next bear market.
We're not smart enough to know if it comes in three months or three years from now, but you need to be hedged so you can buy assets at a reasonable price, and assets are not reasonably priced right now.
This is the approach Porter and several other Stansberry Research analysts have been recommending to readers for months.
This means staying long your highest-conviction investments, but "hedging" those positions by holding plenty of cash and shorting a few stocks.
Of course, if you've been with us for long, you know we believe you should also keep a healthy portion of your "cash" position in gold.
But we're not the only ones who believe that... Many of the world's most intelligent and successful investors have recommended owning gold. The list includes legends like David Einhorn, Seth Klarman, George Soros, Stanley Druckenmiller, and even Ray Dalio – founder of Bridgewater Associates, the world's largest hedge fund – who has said, "If you don't own gold, you know neither history nor economics."
And as we mentioned yesterday, many of these folks are still loading up on gold and gold stocks. Despite the big rally that started the year, they clearly believe the sector is still a "buy" today. Billionaire hedge-fund manager Paul Singer – whose fund Elliott Management earned 14% annual returns for a remarkable 35 straight years – shared his perspective in his latest letter to clients...
It makes a great deal of sense to own gold. Other investors may be finally starting to agree. Investors have increasingly started processing the fact that the world's central bankers are completely focused on debasing their currencies...
[If investor confidence in central bankers'] judgment continues to weaken, the effect on gold could be very powerful. We believe the March quarter's price action could represent something closer to the beginning of such a move than to the end.
The latest data suggest he's right. While the price of gold has been consolidating, the move into gold investments has been accelerating. As Bloomberg News reported this week...
The great gold rush of 2016 is gathering pace. Holdings in exchange-traded funds have now surged by a quarter, with investors taking advantage of lower prices over the past two weeks to enlarge stakes on rising concern about central bank policy making worldwide.
The holdings have increased to 1,822.3 metric tons, the most since December 2013, according to data compiled by Bloomberg, after bottoming at a seven-year low in January. In the past two weeks, as prices lost 1.6%, ETFs swelled 63.2 tons, rising every day.
Today, we note gold fell nearly 2%. Gold stocks – as represented by the VanEck Vectors Gold Miners Fund (GDX) – fell nearly 8%. We can't say for certain, but this could be the start of the first real correction in gold and gold stocks since the rally began earlier this year.
Again, this isn't a reason to worry or turn bearish... Corrections are a normal, healthy part of every bull market.
A sharp pullback would clear out some of the "froth" we've noted, and set the stage for the next move higher. It would also create a great buying opportunity for folks who missed out on the rally so far.
But, as we discussed yesterday, it could be uncomfortable for folks who ignored our advice and put a huge portion of their portfolio in gold and gold stocks. If today's declines keep you up tonight, you probably own too much.
According to our colleague Steve Sjuggerud, there's another big reason to believe gold is likely headed much higher from here. But it has nothing to do with currencies, negative interest rates, or confidence in the Federal Reserve.
It's much simpler than that. We'll turn it over to Steve to explain...
Today, I (Steve) introduced my DailyWealth readers to the best investing strategy most folks have never heard of...
It beats the market. It has only lost money in one out of the last 40 years. And it's so simple a monkey could follow it. It takes about five minutes a month.
Importantly, you don't have to know anything about interest rates, price-to-earnings ratios, recessions, or anything...
All you need to know is, at the end of the month, whether the trend was up or down in any of five major assets: U.S. stocks, foreign stocks, bonds, real estate, and commodities.
Is the black line above the blue line? If yes, then buy it. If no, then don't buy it. That's it.
The returns based on that investing strategy are fantastic, as I showed.
Astoundingly, that exact same simple system works for gold, too...
If the black line (the gold price) is above the blue line (the trend), then buy gold. If the black line is below the blue line, then don't buy gold.
See for yourself:
As you can see, from about 2005 to 2011, you wanted to own gold. And from 2012 to 2015, you didn't want to own gold. (The blue line is the 10-month moving average.)
The results of this incredibly "dumb" system are astounding. Since 1971...
| • | When in "buy" mode, gold went up at a compound annual rate of 16.8%, and |
| • | When in "don't buy" mode, gold lost money at a compound annual rate of 2.8%. |
For comparison, buying and holding gold would have delivered an 8% compound annual return.
What gold strategy do you have that beats this dumb system?
Most people don't have one. But we actually do...
In my True Wealth Systems service, we have a variety of gold systems that are more advanced than this "dumb" system. Going back to 1971...
| • | Our "Gold Trend Trader" System has delivered 26% compound annual gains when in buy mode, |
| • | Our "Gold in Currencies" System has delivered 39% compound annual gains when in buy mode, and |
| • | Our "Gold Super Signal" System has delivered 47% compound annual gains when in buy mode. |
These are astounding results.
(Of course, these systems are not in buy mode all the time.)
While these systems are more advanced than the simple system I shared above, they do have a lot in common. They don't care about interest rates, price-to-earnings ratios, recessions, inflation, or anything like that. At their core, they rely on trends.
As we mentioned yesterday, Steve spent nearly a decade and more than $1.5 million developing the tools behind his True Wealth Systems service. The result is a foolproof system for profiting from big trends in dozens of investments and markets, including gold and gold stocks.
How does it work? In short, Steve discovered that every single big move in these investments is preceded by a specific metric... something Steve likes to call a "Magic Number."
Steve says these Magic Numbers alert him exactly when to buy AND when to sell these investments for the largest profits possible, while taking minimal risk.
Right now, Steve says gold is just one of a handful of assets that could return hundreds-of-percent gains in the coming months and years. For all the details – including how you can put Steve's Magic Number system to work for yourself – click here.
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New 52-week highs (as of 5/17/16): Central Fund of Canada (CEF), VanEck Vectors Junior Gold Miners Fund (GDXJ), Newmont Mining (NEM), Ritchie Bros. Auctioneers (RBA), Regions Financial – Series B (RF-PB), SEMAFO (SMF.TO), and Silver Standard Resources (SSRI).
Several subscribers weigh in on best-selling author P.J. O'Rourke's latest Digest essay. What did you think? Let us know at feedback@stansberryresearch.com.
"Dear Mr. O'Rourke: Sorry... There is absolutely no way I would vote for 'mommy dearest' Hillary. We know she's a snake in the grass. She has proven she's a liar, and cares only for her bank account and wielding power over every aspect of our lives. She and Obama have been a disaster for the middle east, driving from the ditch clear over a cliff. I think you're being too negative about Trump. He's had ups and downs in business, and has done well overall. He has had to meet payroll. I seriously doubt he will treat world leaders like his competition for the nomination where he cleverly used bombast to get a boatload of free publicity.
"I like that he wants to put America first when making deals. We have for too long been giving away the farm. He's the only one running who has a clue about the economy. The rest are huge spenders, and I'll bet he watches costs. Finally, several who have known him many years, Judge Jeanine Pirro, and Rudy Giuliani, for example, both think he will be a good President. I just wish Republicans would stop eating their own, and try lending their support. I do enjoy your writing... Thank you." – Paid-up subscriber Jackie D.
"If [Hillary] is elected and builds on what Obama has done, this country is doomed. What good did Jimmy Carter do for this country? Guess O'Rourke must have liked 16-17% interest payments and run away inflation with price controls. I did not!" – Paid-up subscriber Denny B.
"Listen, I love your stuff from P.J... But why do so many media outlets continue to ignore that we finally have a chance for a legitimate third party candidate who can finally win. Yet they continue to ignore that [Gary Johnson] exists. Now I know Fox, NBC, ABC are all bought and paid for by the big two parties, but shouldn't someone like P.J. with no affiliation and just a raw honest view, acknowledge that a third choice exists, and make the public aware? That we don't need to vote for tweedle Dee or tweedle dumb? That there is someone else they can vote for?
"Now don't get me wrong, in my opinion you are very right about the next crisis, which I think begins to happen in 2017, and no matter who is president it will only be only one term, and I think it would be a shame for that to happen to the libertarian party with their first shot at dethroning the big two party system. But if these people really want to shake things up, why do they not acknowledge the best hope for this country, and bury both Trump and Clinton????? Honestly a vote for Gary Johnson is a vote for 'none of the above.' – Paid-up subscriber Eric M.
Regards,
Justin Brill
Baltimore, Maryland
May 18, 2016
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