Man, you are wicked smart. I have a question: how should someone fresh out of college be allocating their income in this environment? And say this person has a high-risk tolerance. What would you recommend to that person?
Thank YOU "Brandon," as your kind comment enables me to add another account to my large and growing list of "not my wife's burner account."
Biggest thing for a young person is to live well below your means (i.e. save) if at all possible, DO NOT gamble, do not get married unless you are REALLY sure (divorce wrecks peoples' finances often and differences about money a leading cause), and use domain expertise to your advantage. Peter Lynch's first book was good on that topic- for example if you work in an industry that exposes you to what you see as a great opportunity/idea, then do not be afraid to take a much larger position than usual.
Another idea is to find great investors and allocate some money with them and forget about it - Eric Cinnamond at Palm Valley is an example, IMO.
But ultimately the key is to KISS It- save a lot systematically, try to avoid huge mistakes, and let the power of compounding do its thing, .
Another great piece. I too am struggling with Gold. I have a small position recently reduced, but want to own more long-term.
DeMark daily 9 counts have been working fairly well as indicators over the past 18 months. The chart looks like we get a pullback of around 6-8% before the next leg up - but my motto for 2023 is "Anything can happen."
Perhaps exposure to Silver might be prudent along with gold... on every possible metric, chart, or analysis, it's undervalued in relation to other commodities out there. It's got some catch up to do. I also agree about investing in PMs over the past 15 years has left us very scarred..
Hello Adam- I agree on silver and even more so related miners. However, the current backdrop makes it even more tenuous regarding the cyclical dynamics referenced in the piece, IMO, as it has more material industrial use - i.e. potentially more vulnerable to severe global recession.
Very good read Kayfabe. Thank you. In your opinion is gold anticipating another move higher in inflation? Looking at that second to last chart the divergence in inflation and gold is striking? Also, if gold gets thru that resistance line ( 3rd time is a charm) do you increase your allocation in the Dodo? Lastly, if there is a test down to 3600 and it doesn’t hold, would you expect gold to follow the S&P down as you mentioned early in the piece- like 2008? Thanks again!
Hello Mark - the cycle timeframe setup suggests to me that gold/silver should decline, and possibly sharply, with the inflation cycle having peaked and a severe global recession being a deflationary 'shock' until global central banks (and particularly the Fed) and fiscal authorities respond. The historical analogs suggest the odds favor a decline from here prior to 'launch' coming out of the current recessionary bear market - perhaps moving well ahead of the broader market bottom as monetary and fiscal authorities begin to reverse course.
However, the lack of significant exposure and/or bullish sentiment within a long-term context, along with my confidence that fiscal going berserk in the next decade (possibly amidst war), makes the upside asymmetric - particularly for the miners, which are dirt cheap.
I worry about trying to be too 'cute,' which is why I am retaining meaningful exposure. My current triggers to act in the Dodo would be a breakout in inflation adjusted terms in gold above the August 2020 highs, or a retracement in something like GDX into the $22 to $26 area.
Thank you for offering these blogs for free. I find them brilliant and amusing.
In 2008 , though the dollar was weak and then once the crisis started those who were short covered and others fled to it for safety.
This time around the dollar started off strong and has weakened and we have the debt ceiling around the corner. We also have geopolitical issues.
I feel if stocks aren’t safe, treasuries aren’t safe, dollars are weakening then there has never been a better time to be a curmudgeon and hoard gold lol.
I feel like Weinstein, Ray Dalio, and Peter Schiff are very accurate in their calls.
Hello Jeremy- thank you for reading and taking the time to leave such a kind comment.
It is an extremely challenging cycle to navigate, which is the primary reason I launched this Substack. Started saying to people in January last year that there is no shame in holding a very high level of "cash" and waiting for better prices to invest. Personally think a longer term exposure to gold/silver makes sense for diversification purposes. Encourage you to read the Dodo Bird initial post, and more importantly the white paper from Chris Cole linked in the stack.
Man, you are wicked smart. I have a question: how should someone fresh out of college be allocating their income in this environment? And say this person has a high-risk tolerance. What would you recommend to that person?
Thank YOU "Brandon," as your kind comment enables me to add another account to my large and growing list of "not my wife's burner account."
Biggest thing for a young person is to live well below your means (i.e. save) if at all possible, DO NOT gamble, do not get married unless you are REALLY sure (divorce wrecks peoples' finances often and differences about money a leading cause), and use domain expertise to your advantage. Peter Lynch's first book was good on that topic- for example if you work in an industry that exposes you to what you see as a great opportunity/idea, then do not be afraid to take a much larger position than usual.
Another idea is to find great investors and allocate some money with them and forget about it - Eric Cinnamond at Palm Valley is an example, IMO.
But ultimately the key is to KISS It- save a lot systematically, try to avoid huge mistakes, and let the power of compounding do its thing, .
It's an honor to be a part of that list and thank you for this, it's extremely helpful!
Another great piece. I too am struggling with Gold. I have a small position recently reduced, but want to own more long-term.
DeMark daily 9 counts have been working fairly well as indicators over the past 18 months. The chart looks like we get a pullback of around 6-8% before the next leg up - but my motto for 2023 is "Anything can happen."
Perhaps exposure to Silver might be prudent along with gold... on every possible metric, chart, or analysis, it's undervalued in relation to other commodities out there. It's got some catch up to do. I also agree about investing in PMs over the past 15 years has left us very scarred..
Hello Adam- I agree on silver and even more so related miners. However, the current backdrop makes it even more tenuous regarding the cyclical dynamics referenced in the piece, IMO, as it has more material industrial use - i.e. potentially more vulnerable to severe global recession.
Very good read Kayfabe. Thank you. In your opinion is gold anticipating another move higher in inflation? Looking at that second to last chart the divergence in inflation and gold is striking? Also, if gold gets thru that resistance line ( 3rd time is a charm) do you increase your allocation in the Dodo? Lastly, if there is a test down to 3600 and it doesn’t hold, would you expect gold to follow the S&P down as you mentioned early in the piece- like 2008? Thanks again!
Hello Mark - the cycle timeframe setup suggests to me that gold/silver should decline, and possibly sharply, with the inflation cycle having peaked and a severe global recession being a deflationary 'shock' until global central banks (and particularly the Fed) and fiscal authorities respond. The historical analogs suggest the odds favor a decline from here prior to 'launch' coming out of the current recessionary bear market - perhaps moving well ahead of the broader market bottom as monetary and fiscal authorities begin to reverse course.
However, the lack of significant exposure and/or bullish sentiment within a long-term context, along with my confidence that fiscal going berserk in the next decade (possibly amidst war), makes the upside asymmetric - particularly for the miners, which are dirt cheap.
I worry about trying to be too 'cute,' which is why I am retaining meaningful exposure. My current triggers to act in the Dodo would be a breakout in inflation adjusted terms in gold above the August 2020 highs, or a retracement in something like GDX into the $22 to $26 area.
Great article, personally planning to lighten up on miners and gold a little soon, but only in the context of having firepower available.
Thank you for offering these blogs for free. I find them brilliant and amusing.
In 2008 , though the dollar was weak and then once the crisis started those who were short covered and others fled to it for safety.
This time around the dollar started off strong and has weakened and we have the debt ceiling around the corner. We also have geopolitical issues.
I feel if stocks aren’t safe, treasuries aren’t safe, dollars are weakening then there has never been a better time to be a curmudgeon and hoard gold lol.
I feel like Weinstein, Ray Dalio, and Peter Schiff are very accurate in their calls.
Hello Jeremy- thank you for reading and taking the time to leave such a kind comment.
It is an extremely challenging cycle to navigate, which is the primary reason I launched this Substack. Started saying to people in January last year that there is no shame in holding a very high level of "cash" and waiting for better prices to invest. Personally think a longer term exposure to gold/silver makes sense for diversification purposes. Encourage you to read the Dodo Bird initial post, and more importantly the white paper from Chris Cole linked in the stack.