how to benefit in times of crises - COVID-19 - Corona

[Tax Cow]

@wonderwhat

Gold a scam, targeted only to retail investors? Oh boy, what a pearl!

It's the only asset with a track record of over 10K years in purchasing power preservation. USD lost 98% of it's purchasing power over the last 100 years. Most fiat papers (if they even existed for that long) lost 99% or more. Gold lost zero.

If you recommend anyone to stay in cash over gold, you better specify it's only for short-term. Over a 10-year time horizon, gold has, and always will shred every (absolutely every) central bank fiat invention.

 

[KJK]

If there is a "scam targeted to retail investor" I can think of few:
- the entire constant-flow pension systems that are basically a state-operated scam
- fancy advisory companies and pension funds that have 3-5 % onloading fees and 2 % p.a. fees

Gold isn't a scam, I'm not a fan but I don't see it as a scam.
You probably can't expect gold to make 10x gain (though it is not impossible) but at least it is not so inflated. There is a good analogy - 150 years ago you could buy a nice well made suit for 1 oz of gold or $20. Today you still can get a suit for 1 oz of gold but for $20 you can maybe but good... socks?

 

[Martin Everson]

It would be difficult to believe all the central banks of the world that hold gold have been scammed. However their is an aspect of gold being oversold as a savior solution to a financial collapse to retail investors. I do have a problem with charlatans like Peter Schiff selling gold to brainwashed followers in exchange for dollars while at same time telling people the dollar will collapse. You work that one out .

 

[Martin Everson]

So it's a good time to invest in cheap crude oil companies in the US? Got it. Thanks.

The US government by means of using the Fed can and will print as much money as is needed. They will buy with no limits corporate bonds to support these failing useless, non-profitable shale industry etc if it means winning votes .

The US government has created in a $2,000,000,000,000+ life support machine to keep the presently brain dead economy artificially alive. However at some point the life support machine will be switched off and that's the moment investors will realize the patient can't breath on its own and reality sets in and they flee again. Make your money while you can if your into the stock markets...im not however.

P.S Oil prices need to be much higher. So how are the US gonna achieve higher oil prices? I see Saudi's being the sacrificial lamb sadly.

 

[wonderwhat]

It would be difficult to believe all the central banks of the world that hold gold have been scammed. However their is an aspect of gold being oversold as a savior solution to a financial collapse to retail investors. I do have a problem with charlatans like Peter Schiff selling gold to brainwashed followers in exchange for dollars while at same time telling people the dollar will collapse. You work that one out .

@Martin Everson
I was talking about the latter.

@xzars
I mentioned the word "Rescission". So, it's short term.

I never directly said gold was a scam. It is a commodity as it's used in jewelry.

 

[wonderwhat]

Everything is a ponzi scheme including currencies, all tools to store value, bitcoins, your government, religion and family to an extent. Goal is to use ponzi schemes to your advantage.

It's that retail believe currencies as a Ponzi scheme hence the exploitation become easy prey. I firmly believe that Ponzi schemes would not able to run the scheme without a proper currency hence the currency is stable and last long.

If you believe that inflation is a ponzi scheme then you would have to think again. During rescission, deflation occur and things goes bad during deflation. I must state the value of debt goes up, so the companies goes bankrupt. Society become miserable. if you want to start a world without inflation then colonize mars and bring up your kids over there.

Deflation is an economy without inflation. People will stop spending monies during deflation as you can see the subject of topic equals to asking how to stop spending money and where is the best place put my money without inflation.

Now that doesn't means you can't benefit during Deflation. You actually can but if everyone start to do it then things will go horribly.

[1] Deflation - Wikipedia

 

[Martin Everson]

Good interview with Robert Kessler to watch. Watch to very end around 24:00 minute mark for his final summary.

 

[OKboomer]

@Martin Everson , for me one thing is not clear. When you say that cash and cash-like instruments (e.g. sovereign bonds) are your preferred options - you said it before corona and are saying this now - where do you actually hold those? I assume in some kind of financial institution. The follow-up question then, in this crazy unprecedented situation, do you not fear that the financial institution where you are holding your smart position in cash or sovereign bonds, may itself collapse? Worst case scenario, which you described with FDIC (250k USD) or EU (100k EUR) insurances possibly collapsing, you lose all. But let's even assume you will get back your insurance payment, but what if you have 5 million USD? Then you are at risk of losing 95% of your net worth, if the financial instution of yours collapses and you are only eligible to the maximum legally prescribed insurance payment. (don't tell me that one can open 10 bank accounts , getting 10x 250 insurance, because it's tough to open bank accounts, so suppose you are stuck with 1-2 bank accounts, i.e. you are covered up to 500k USD but where do you store the rest 4,5m USD? This was a question of mine for you even before coronavirus, but right now it's even more pertinent. What say you to this?

 

[Spinat]

WoW how did I miss this thread growing that big that fast!

you said it before corona and are saying this now - where do you actually hold those? I assume in some kind of financial institution.

You could consider to buy or rent a old house, just leave it as it is but arm it with alarms and cameras, so you hide a safe somewhere in the building and don't tell anyone. Or you rent a flat on the 55th floor and keep your money there.

It isn't that complicated I think.

 

[Martin Everson]

you said it before corona and are saying this now - where do you actually hold those? I assume in some kind of financial institution.

With EU banks and one EU clearing house via sponsorship.

The follow-up question then, in this crazy unprecedented situation, do you not fear that the financial institution where you are holding your smart position in cash or sovereign bonds, may itself collapse?

Not at all I hope all these EU banks crash it will just drive up the value of my assets . In EU, custodied (investment portfolio) assets not issued by the custodying bank and held by that bank are ring fenced. Meaning they cannot be used in a bail-in event like deposit accounts and other assets. They cannot even form part of any bankruptcy proceedings of the bank. Your assets remain protected regardless of what happens to the bank including protection against any bail-in. It is one of the reasons I recommend it and one of the reasons people have run to put money into AAA treasury bonds to eliminate the counter-party risk of leaving money on a deposit account with only 100k deposit protection. It's a small price to pay to pick i.e a German - 2.5% 4 Jan 2021 bond knowing it yields currently circa -0.735%. Think of that loss as an insurance policy premium for 1 year guaranteed protection of your assets. The ring fencing is explained by some banks to clients such as DB (see page 2 below under "How could I be affected?")

https://www.deutsche-bank.de/conten...abwicklung-und-glaeubigerbeteiligung-engl.pdf

So if I keep 1,000,000 euros on a EU deposit account and the bank collapses I get only 100k back and lose 900k . However if I instead bought the AAA rated 2.5% 4 Jan 2021 German government bond and the bank collapses I get back 992,650 euros (i.e 1,000,000 minus the -0.735% negative interest rate). So would you rather lose 7,350 euros in a year or risk potentially losing 900,000 euros? That's the price of insurance effectively and the decision is much easier if you have 100,000,000 in cash in a bank and risk losing 99,900,000 if bank folds . If you are a millionaire or a business this is exactly what they have done for years driving treasury yields negative due to demand for this practice or parking money in treasuries. This is what warren buffet does in US with sticking Berkshires circa $160bn cash pile into US Treasuries (sorry I don't know much about ring fence laws in US but assume they will be similar to EU) and this is what people do EU side who have money. No one should keep cash on an account who has more than 100k and I strongly advise against it.

This was a question of mine for you even before coronavirus, but right now it's even more pertinent. What say you to this?

See my above answer. I hope it answers your questions.

I discussed the subject back in 2018 and my strategy and stance has not changed one bit and have been proved correct (see below thread). Custody accounts are outside the scope of the EU Bank Recovery and Resolution Directive (BRRD) so are protected from any bail-in or bankruptcy with minor exceptions i.e cost of bankruptcy proceedings by administrator can be taken from client assets in exceptional circumstances.

FSCS / Depositor Compensation Schemes

I was looking to spread some assets over more banks / emi / brokers that take part in depositor compensation schemes. Most brokers e.g. in the UK will take part in the FSCS scheme or Einlagensicherung in Switzerland. Financial Services Compensation Scheme |FSCS Deposit Insurance If you...

www.offshorecorptalk.com

 

[Marie Manila]

Honestly I expect many currencies will get an inflation, especially the Euro.
In which currencies would you go to invest?

Would you rather go for small national currencies, like MGA (Madagascar) and GEL (Georgia)?
Or would you go for big currencies like USD, RMB, HKD, SGD, RUB and CHF?

 

[Martin Everson]

In which currencies would you go to invest?

Now is not time to be investing or speculating on currencies.

Would you rather go for small national currencies, like MGA (Madagascar) and GEL (Georgia)?

Don't mess around with countries currencies such as Madagascar which has the GDP of a walnut.

Or would you go for big currencies like USD, RMB, HKD, SGD, RUB and CHF?

A lot depends on the Central Bank actions of those countries which currencies you mention. The central banks all collude and follow the lead of the US Fed to manage interest rates as a global approach to this issue is needed so I don't think picking currencies will work this time around. For example Switzerland is not doing well in this crisis. It is one of the countries most affected.

Just go with SDR basket of currencies if anything. However what we have now is a global economic crisis and is not a currency crisis so messing around with currencies makes no sense to be honest.

 

[Marie Manila]

Now is not time to be investing or speculating on currencies.

I don't want to "speculate" on currencies. I have the feeling, that many currencies may get a very high inflation and I want to be prepared to save at least some of my money.

Don't mess around with countries currencies such as Madagascar which has the GDP of a walnut.

MGA was just an example of a very small and quite unknown currency. You could also place MUR (Mauritius) here instead, for example.
I think, Madagascar (or Mauritius) may not have that much trouble like for example US, Australia or Europe.
So maybe there is no need for that high inflation of these small currencies.

However what we have now is a global economic crisis and is not a currency crisis so messing around with currencies makes no sense to be honest.

Exaclty. It is a global economic crisis. So I am searching for something to come over this.
Many currencies may get inflated.
Shares are no option, like you mentioned already. They will also go down.

So what is the best for your money to survive this crisis? Of course, you have to diversify. But in what exactly?

 

[kkein]

TBH it's probably easier to convert physical gold into any desired currency than MGA,MUR or some other unknown currency.

 

[Martin Everson]

So what is the best for your money to survive this crisis?

Go with any currency in SDR basket. We are not yet in a currency crisis.

P.S I am just thinking out loud but US is gonna want to have a weaker dollar to come out of this crisis.

 

[OKboomer]

WoW how did I miss this thread growing that big that fast!

You could consider to buy or rent a old house, just leave it as it is but arm it with alarms and cameras, so you hide a safe somewhere in the building and don't tell anyone. Or you rent a flat on the 55th floor and keep your money there.

It isn't that complicated I think.

Yeah, but how much money can you keep in hard cash anyhow? Definitely a small fraction at most, for a rainy day / survival. You can't even really bring back huge heaps of cash bank to your bank to deposit as far as I know , nor can you execute any significant transaction over X thousand USD\EUR. So it won't work for buying property or some other big transaction.

With EU banks and one EU clearing house via sponsorship.



Not at all I hope all these EU banks crash it will just drive up the value of my assets . In EU, custodied (investment portfolio) assets not issued by the custodying bank and held by that bank are ring fenced. Meaning they cannot be used in a bail-in event like deposit accounts and other assets. They cannot even form part of any bankruptcy proceedings of the bank. Your assets remain protected regardless of what happens to the bank including protection against any bail-in. It is one of the reasons I recommend it and one of the reasons people have run to put money into AAA treasury bonds to eliminate the counter-party risk of leaving money on a deposit account with only 100k deposit protection. It's a small price to pay to pick i.e a German - 2.5% 4 Jan 2021 bond knowing it yields currently circa -0.735%. Think of that loss as an insurance policy premium for 1 year guaranteed protection of your assets. The ring fencing is explained by some banks to clients such as DB (see page 2 below under "How could I be affected?")

https://www.deutsche-bank.de/conten...abwicklung-und-glaeubigerbeteiligung-engl.pdf

So if I keep 1,000,000 euros on a EU deposit account and the bank collapses I get only 100k back and lose 900k . However if I instead bought the AAA rated 2.5% 4 Jan 2021 German government bond and the bank collapses I get back 992,650 euros (i.e 1,000,000 minus the -0.735% negative interest rate). So would you rather lose 7,350 euros in a year or risk potentially losing 900,000 euros? That's the price of insurance effectively and the decision is much easier if you have 100,000,000 in cash in a bank and risk losing 99,900,000 if bank folds . If you are a millionaire or a business this is exactly what they have done for years driving treasury yields negative due to demand for this practice or parking money in treasuries. This is what warren buffet does in US with sticking Berkshires circa $160bn cash pile into US Treasuries (sorry I don't know much about ring fence laws in US but assume they will be similar to EU) and this is what people do EU side who have money. No one should keep cash on an account who has more than 100k and I strongly advise against it.



See my above answer. I hope it answers your questions.

I discussed the subject back in 2018 and my strategy and stance has not changed one bit and have been proved correct (see below thread). Custody accounts are outside the scope of the EU Bank Recovery and Resolution Directive (BRRD) so are protected from any bail-in or bankruptcy with minor exceptions i.e cost of bankruptcy proceedings by administrator can be taken from client assets in exceptional circumstances.

FSCS / Depositor Compensation Schemes

I was looking to spread some assets over more banks / emi / brokers that take part in depositor compensation schemes. Most brokers e.g. in the UK will take part in the FSCS scheme or Einlagensicherung in Switzerland. Financial Services Compensation Scheme |FSCS Deposit Insurance If you...

www.offshorecorptalk.com

Thanks a lot for the detailed reply. Did not know about ring-fencing of portfolio investments, which does change the picture quite significantly. I will try to research if it's a practice in other jurisdictions or only the EU. Will look closer into this.

 

[extremedox101]

Everything is a ponzi scheme including currencies, all tools to store value, bitcoins, your government, religion and family to an extent. Goal is to use ponzi schemes to your advantage.

this guy is a nutcase , also i believe he pushing some agenda .

 

[iloveyouguys]

@Martin Everson what are you thinking about USD's future after the recent news? any changes?

 

[Martin Everson]

@Martin Everson what are you thinking about USD's future after the recent news? any changes?

No change in my thoughts. A weaker dollar is needed. The next event maybe a race to the bottom between G7 currencies which might manifest in a temporary gold bubble. Maybe even a short mutually orchestrated and limited fake conflict with between US and Iran to give some bounce to oil prices. Both countries would win in such a scenario. The dollar is oil and oil is the dollar that's why I say this.

 

[suppliersten]

Hello folks, is it actually possible to earn 50-100% by short selling stocks during this crisis? I suppose either the S&P 500 or solid ETFs..?

Would anybody invest in emerging markets liek Brazil EWZ or Latin America ILF that have lost decades of values now?