There is the old adage that says “The Trend Is Your Friend”. Historically people that move against trends, for the most part, are the ones that incur financial loss. So it is imperative to understand and to be on the right side of a trend to benefit financially. I believe the world is moving into a new era, a shift on a large historical level towards De-Globalization. To understand De-Globalization, one must first understand that some of the stepping stones the world has established in creating a Global society, and the results showing that is what the world has evolved too.
De-Globalization, The Pathway Back To The Future
The International Monetary Fund: There were several major global events that have been the building block for a Global Society. The obvious ones are The International Monetary Fund (IMF) whose organization is headquartered in Washington D.C., currently representing 189 countries to secure financial stability and to facilitate international trade and economic growth and also reduce poverty around the world. Formed in 1944 at the Bretton Woods Conference with just 29 countries for the goal of reconstructing the international payment system, that has now evolved into the surveillance of the global economy. Recently focusing on the debt structure of countries, and the need for Bail Ins to happen (The IMF 107 page report titled “Taxing Times”) globally for proper economic development and minimizing a repeat of 2008’s financial crisis.
The European Monetary Union: To create a more powerful European financial strength in the world, The European Monetary Union (EMU) was established in 1990 representing 19 countries. The European Central Bank (ECB) was established in 1998 and then in 1999 the Euro was launched.
North American Fair Trade Agreement: To develop strong trade between our bordering countries Canada and Mexico, The North American Fair Trade Agreement (NAFTA) was established in 1994. The purpose was to eliminate barriers to trade and investments between the U.S., Canada, and Mexico. It’s passing brought immediate elimination of tariffs on more than one-half of Mexico’s exports to the U.S. Canada’s and U.S. trade were already mostly duty-free.
2008 Financial Crisis: Even though the fall of Lehman Bros was a U.S. corporation that had severe systemic effects around the world. Because of globalization, the whole world was affected via a “domino” systemic financial crisis.
Events setting up De-Globalization
The Chinese currency, The Yuan coming on the global landscape has attracted attention. It has gather appeal now from 19 countries to make trade no longer in Dollars but rather the Yuan. The Chinese currency gained so much momentum that is broke what is called The Petro Dollar, a major black eye for the U.S. Just briefly The Petro-Dollar was established between the U.S. and OPEC in 174 that all oil contracts will only be traded globally in Dollars. This was the way of getting the world (or should I say keeping the world) to use the Dollar as the world reserve. This was a major contribution for the U.S. to create debt or Treasury Notes for the world to buy. Since the Petro-Dollar has been broken oil trades regularly in other currencies and is gaining steam competing with the U.S. Dollar. Britain exiting from the Euro (called Brexit) last August exemplifies countries wanting to not be so interconnected. Trump campaigned on making America great. He wants America to be first not second or last anymore. We make terrible deals he says. He is going to renegotiate all trade deals and has said NAFT was terrible for America. He wants to build a wall between the U.S. and Mexico and make Mexico pay for it.
The severe ramifications of De-Globalization to the U.S
It is such a two edged sword with benefits of taking care of America yet that doesn’t come with several challenges. Keeping America great is a road that leads to job growth yet with many obstacles and possible detours or maybe even “dead ends” along the way. Keeping companies in America to keep our jobs here is vital. Companies that choose to break ranks and continue the trend of outsourcing manufacturing and services to other countries might be facing severe tariffs. Unfortunately, tariffs historically affect the industry and company stocks and realize higher prices for those products and services being sold to the U.S. which is only passed off to the consumer. To the depth and the implementation of De-Globalization of the U.S. against the rest of the world we could see many challenging times. Countries might not like the disconnect we have with the rest of the world. They are used to getting the best part of the deal when those were made years ago and now those agreements might and are going to go by the wayside, countries might retaliate. While countries are selling off dollars, citizens from those and other countries and pouring money into our markets causing them to rise beyond normal levels causing early signs of a “bubble” in the stock market.
We could see China and other governments selling off more dollars or we could see at the least foreigners backing away from buying our debt, which is a trend that has already started two years ago. The Stock market currently is moving aggressively showing early signs of irrational exuberance if continued would be overvalued relative to Price per earnings ratio (P/E). Historically the market is well beyond a correction of every 7-8 years a correction happens when there is no sign of the public seeing those signs. Again were are in the environment and this could be compounded with De-Globalization. Keep in mind in 2001 the market corrected and gold went into a major multi-year Bull Market in Gold because of the spending and debt of our country. In 2008 stocks corrected about 45% and gold move up in 2009 72% and again a multiyear run.
Now that gold has corrected, as all marketed do, it is now at the mining cost of gold and an undervalued asset rather than stocks showing an overvalued asset. Isn’t one simple idea of investing is “buy low sell high”?
January 2017 Newsletter
Next month’s newsletter I will write about the correction in gold and President-Elect Trump’s announcement saying he is not repealing the Dodd-Frank Act. So you still should be very concerned about government intrusion or seizure on your hard money. I will also share with you detailed research showing unfortunately how our country’s debt will balloon. Before you “turn me off” I am a Trump supporter, and I so glad he will be our President. My favorite President was Reagan, whom my dad served with, and you will see a significant correlation of Trump and Reagan and you might even learn a few things as certainly I have recently done. If you haven’t yet signed up for our newsletter and would like to receive monthly updates, click here to sign up.
Year End Discount
There is a year-end discount happening this year. This is generated by wholesalers whom have to pay an inventory tax. They are just like you and I, they don’t like writing out a check to the IRS. In lieu of this they discount their inventory and Landmark Capital pass the savings off to you. The discount this year will be between 10-20% which is rather significant compare to the majority of the discounts I have seen. This is an excellent opportunity and I encourage you to call our company to learn about this. Not to sound like pressure since we don’t operate that way, the discount for the most part will take place between Christmas and New Year’s. Once learning about what markets this will happen in then you can make a decision if you want to take advantage of it or not.
Merry Christmas
For those who have become a client of Landmark Capital, I personally want to thank you for your business. For those of you who were pondering if now is the time to buy gold I can say with confidence I have never seen the need or the buying opportunity in 23 years as great as this. We have never had more certainty and hope brought to our nation coupled with a greater uncertainty in these very challenging times. Because of these things this now is the time to be buying gold either for the first time or adding to your portfolio.
Merry Christmas,
CEO of Landmark Capital