Edit: This is not financial advice.  I’m not a financial advisor and I’m wrong 100% of the time.  Investments are risky and nothing mentioned here should be considered financial advice.  Invest at your own risk.

 

I watch/listen to a lot of YouTube videos.  I mean, a lot.  Many of these channels I watch are people making commentary on world news.  They read newspaper articles of world news, then make comments.  They aren’t making this shit up in their mom’s basement.

I got my first real dose of how the mainstream media works during this pandemic.  I was watching Peak Prosperity daily from pretty much the end of January through today.  This guy was citing articles all over the world and showing what best practices were working in Singapore, South Korea, and Hong Kong.  It was so obvious how to prevent or reduce the impact to the coronavirus here.

At the same time I’m writing articles here 2 months ago about corona, you’d have people all over my facebook posting things like “the flu kills 30,000 per year, shut up Nate”.  I spent hours trying to convince people this is going to be a big deal.  I prepped at my house.  I have 3-4 months worth of food supplies.  While I’m hoping the worst is behind us at the end of April, this could be around for awhile in different degrees of shit storm.

Anyway – as this played out, I had watched commentary from all over the world on this with the mainstream media following some sort of script to deny and mock all attempts t legitimize this as a real concern.  I’m screaming from the rafters and everyone I knew 2 months ago was like…”meh – wake me up when you get to a million dead”.

I was mocked.

This changed my perspective on trying to convince other people of “I’m right, you’re wrong”.  I don’t even have the innate satisfaction of doing the “I told you so” dance.  It just is what it is.  Lots of people suffering.  You don’t want to be right.  You want to inform, spread the news, and hope that the worst will not happen.  I started my writings in early February.

But as I mentioned, this also changed my perspective.  I warned all of you in late December about the financial markets melting down – right here.  I begged and pleaded with you in February about the markets.  People then proceeded to lose trillions.

I made money.  I continue to make money.  Not Gordon Gecko money, but enough to pay my bills.  I’m not a wealthy man.  Never have been, never will be.  But – I have always had foresight to be an early adopter.  There is risk with this.  However, for those of us not born with millions or a trust fund, we must find our competitive advantage in some way, shape, or form.  Some of you work 18 hour days.  Some of you work in your own small business.  Some of you have 3 jobs.  To each their own – but we must find a path.

What is it that I’m seeing now play out?

  1. Oil.  I was making mention of some recent success and my buddy was like, “yeah.  You’re a genius. You buy low and sell high.  Real smart”.  Let me explain.  With all of the bells and whistles going on in the world, how do you know something is low?  Is someone telling you?  Do you have to read the newspapers?  Is it low, or did the value of it shrink to market value?  Was it overbought, or is it now undersold?

I have an app from Kitco where I can watch all of the spot prices of metals, metal miners, etc.  One of the commodities I added to it was oil.  Oil was at $54.  No biggie.  Over the course of months, I then saw it drop to $45.  Then $42.  Then $30.  One day I woke up and it was like $24.

I’m like, “how does oil go from $54 to $24 in a month”?  I looked it up, and it turns out Saudis saw price decreasing worldwide with lower demand due to Coronavirus.  They suggested to OPEC to cut prices – get back to $54 or even higher.  Apparently, Russia works as an ally to OPEC and said, “no, we want to keep pumping oil”.  Saudis, furious, said, “fine, we will bring everyone to their knees” and decided to open the taps.  This drove oil prices down ultimately to $20 per barrel for Brent Crude.

I had NO idea how to get in on this low oil price.  I’m not going to have millions of barrels delivered to my backyard, so how can I get in on this?  There’s a number of ways, but I found a BNO ETF that trades along with the up/down price of Brent crude.  I started to get in around $11, but bought more when it dipped more to lower my dollar cost average.

BNO

In January, this was trading at $21 and now it’s down to $7????

Yes.  Planes are now grounded.  Yes.  Cruise liners are docked.  People are not driving to work.  But if you could buy this at $7 or $8 and hold for 12-24 months, surely, it might come back to…$14?

I had also bought some options at $9 when the price dipped to $8, and options at $8 when the price hit $7.50, so got them pretty cheap.

What was I seeing?  Mainstream media was writing:

  • oil war could last months or years
  • Saudi trying to crush shale oil

I’m wondering how legit mainstream media was reporting this.  Why?  This was pushing put to short or put the stocks.  Get out!!!

I’m sitting there seeing the below:

  • Saudi started this by wanting HIGHER prices.  This will decimate the industry prices
  • We sell the Saudis American military weapons and are one of their only allies in the world
  • American oil in Texas will be crippled by this – and we have some powerful senators and congressmen from TX.
  • Shale oil is now all over the country, and big industry for a lot of states
  • With the virus, there will be many millions of lost jobs, even temporarily.  Trump cannot afford a complete melt down of the oil industry on his watch.

So with this, I started to tell a few of my friends what I was seeing.  Some of them went in BIG and are seeing “unrealized gains”.  You don’t actually make/lose money until you sell the stocks or your options times expire.  I told them exactly what has played out.  Trump and the politicians will get involved quickly.  And, they did.  OPEC expected to meet Monday.  With that, BNO shot up over $3 per share.

But – there’s still risk.  What if Putin wanted to drive a wedge between Saudis and US?  What if Putin wanted the US to intervene and offer Russia something to cut production – like ease of sanctions?  What if Saudis wanted better deals on missiles?  What if they both wanted the US to cut production?

While this deal may take a few weeks to iron out, I could see BNO getting up to $12 in the near term with possibly up to $14.  For the stock side, it might be a good hold for 12 months to take your $8 stocks and cash out when it gets back up to $18-$20.

On the risk side, BNO is an ETF.  If shit goes south in the next month further with the stock market, ETFs could also be at risk.  In order to de-risk from ETFs, My play will be to wait until options/stocks hit $14 (if it gets there) and sell the options and put  stop/loss on the stocks at 10%.  Yes – there may be more meat on the bone to get to $16 or $18, but I’m not one for a lot of risk here.

I’m not a financial adviser – just relaying how I’m playing it with a few bucks I saved up in milk money.

2. Silver/gold – Months ago, I had advised buying physical silver/gold if you could afford it.  I also have bought in on miners like AG, PAAS, GOLD, EQX, SILV, MAG.

Back again with YouTube.  I had watched Mike Maloney’s hidden secrets of money series, and episode 7 today is too close to home.  This is from 2016, and I would ask each of you to watch this to see what’s happening – today.

What happened to kick this all off was I had heard that the fed got involved in the repo market in Sept, and there was a liquidity issue.  It seemed there was too much risk in the MBS and banks wouldn’t lend to each other, so the interest rate spiked up and the fed got involved.  Alarm bells rang on YouTube, but I didn’t know what to make of all of it.

I dove in.

Soon, I started to understand the market was severely overbought.  There was a sell off coming up, and soon.  More and more channels were popping up talking about the upcoming issues.  There was this “Everything bubble” created with low interest rates.  Ironically, in 2016, when they tried to gently increase interest rates, they almost burned the whole system to the ground.  There was a trap set and we could not raise interest rates.

If only there was a world event to pop the bubble?  Truth be told, I felt the first domino to fall would be Deutsche Bank, and perhaps Ford.  With the repo market picking up steam in December, the time bomb was set.  This is when I started writing a lot about metals and “end of days” type of shit.  It wasn’t that I felt we were going “Hunger Games” next week, but once again – mainstream media seemed to be asleep at the wheel screeching about Donald Trump and impeachment.

As the virus began picking up steam in China and Asia, this country was completely ignoring it.  What many of you don’t know is hundreds of CEOs over the last 2 months cashed in their chips and golden parachutes and left their companies.  Hundreds.  The stock market kept ticking higher…and higher.  I got the fuck out of anything in early January.

And I’m like…WTF dude?  China is shut down and stocks keep going higher????

Metals baby.

Here’s the deal…..

When the stock market tanks, people take their money and put them in 10 year treasuries and gold.  In some cases, silver as well.  Gold and silver have been money for 5000 years.  However, in the last 30-40 years, silver is now seen more like a commodity like copper because it is legitimately used in thousands of electronic components.  It’s big for cars, solar panels, stretchy pants, and bandages (the last 2 due to antibacterial properties).   The antibacterial properties are also seen in “silverware”.  “Born with a silver spoon in your mouth” – had to do with more well to do families were “healthier” because silver is antibacterial.

So silver has more recently been seen as a commodity, but it is dual hatted with monetary value with gold.

In ancient times, 2.5 ounces of silver would buy you an ounce of gold.  In ancient Egypt and Rome, it was about 10 ounces of silver per ounce of gold.  Silver comes out of the ground 9 times more than gold.

Yet, today, it would take you 120 ounces of silver to buy one ounce of gold.  It tells you silver is extremely undervalued or gold is extremely over valued.  Long story short, both are extremely undervalued.

In times past, the dollar was pegged to gold.  So was silver.  There’s a massive reason for this.  Fiat (think paper money) currency has tried and failed in every society going back to the dawn of mankind.  It doesn’t make a lot of sense to lug around 30 pounds of silver to buy a TV, so people created paper currency as representations of gold and silver.

In our constitution, it reads that:

From Article I, Section 8, there is “Congress shall have Power…to coin Money, regulate the Value thereof, and of foreign Coin.” And from Section 10, “no state…shall make any Thing but gold and silver Coin a Tender in Payment of Debts.”

It seems our forefathers also knew the history of fiat currency and wanted us to not use it.  Yet no one seems to bat an eye about this constitutional provision being overlooked today.

What has happened since 1971, was we went off of the Gold Standard after the French called our asses on it.  Nixon signed an executive order.  Ummmm…not sure that’s exactly legal to go against the constitution.   The US dollar was then pegged as world currency, and this was tied to oil.  The “petro dollar”, if you will.   The hell with the constitution.

However, this allowed the US to print currency (not money, currency) in our basement at will.  All other world currencies are then traded against the US dollar.  As the dollar gets stronger, gold goes down.  As the dollar goes down, gold goes up.  Remember this.

So back in the day, if you had $50 billion in dollar currency floating around, there was $50 billion in gold bars, coins, etc.  Well…..we sort of fucked up.  Pardon my french.

Today, if you were to take all of the dollars printed and try and convert them to all available ounces of gold, you get $55,000 per ounce.  Today, gold trades at about $1600 per ounce.  That means our currency got way out of whack.  If Russia or China wanted to get rid of shitty paper and go to gold, all they had to do was trade in US dollars for gold.  Which….they did over the last 5 years.  That means, essentially, that you could buy all of the gold 34 times over with paper US currency.

The same for silver.  Back in the day, dollars were silver notes and could be traded for silver.  Coins were made of 90% silver.  Today, if you took all of the dollars made and traded them for silver, you’d get $2000 per ounce.  Today, silver trades at just north of $14 per ounce.  This means if you took all US currency, you could buy all of the silver 142 times over.  This tells me that silver is undervalued by gold by a magnitude of 4.2 times.

Should gold by 4.2 times less, or silver 4.2 times higher?  All things being equal, if we say silver was undervalued, that puts it at nearly $60 per ounce.

But get this – both of these commodities have been juked by a paper market to artificially keep them low.  In 1933, they made it illegal for you to own gold.  Think about that.  What they didn’t want were people hoarding gold and silver and driving the prices up.  So they discouraged this with a commodities exchange.

Recently, J.P. morgan has had some of its people indicted and will turn states evidence against JP Morgan for price manipulation of silver.  This is leading to racketeering charges for JP Morgan at some point – possibly.  Apparently, they have already paid out $45 billion in fines over the years for other items.  I don’t know where this will go, but it’s possible this could curtail some of the big banks from pegging down the gold/silver prices.  Maybe.

Big picture – people flock to gold/silver in times of turmoil.  First, gold moves higher.  This is your big banks moving gold around and purchasing.  You can clearly see nation states buying up gold in the recent years.  You can see countries worried about economic collapse moving their gold back to their own countries.  Recently, Poland, Austria, and Romania has repatriated their gold from London.  Why?

Everyone has known shit is about to get real, except you and I.  Where we would watch 24×7 coverage of scary orange man bad, all of you have been missing what is going on elsewhere in the world, where everyone else appears to be moving away from the US dollar.

Now…shit hit the fan with corona.

Stocks went south.  Fast.  Margin calls happened.  EVERYTHING not nailed down got sold.  This includes gold/silver and mining stocks.  There was a quick deflation – just as Maloney predicted.

In the short term, silver I had bought at $17 spot price was now saying $11.75 per ounce?  It has since recovered to $14.50 per ounce  Do me a favor.  Go to any metals website and find me $14.50 silver.  Please.  Be my guest.  Apmex, monument metals, SD bullion, JM bullion, go to any site.  What you will find is usually $21-$25 per ounce – IF they even have it.  Go to ebay.  A tube of American silver Eagles selling a few weeks earlier at $409 for 20 of them are now selling for $480.

Gold premiums are $100 for a single ounce and $200 for pre-33 gold.

THERE IS A STARK DISSONANCE BETWEEN SPOT PRICE AND PHYSICAL BULLION PRICE

You need to understand that the “paper” prices of these products are about to have a day of reckoning.  

A few other things are going on now to make things even more interesting:

  • Local coin shops are shut down as non essential businesses
  • Mints are now shutting down.
  • Mints get their metals from refineries.  Refineries have shut down.
  • Miners have shut down.
  • China now coming back online
  • 70% of all silver is produced as a byproduct of “base metals”.  With the massive cutbacks in production, orders for base metals are way down.  This depresses the production of silver.
  • The largest 2 silver producing countries in the world, responsible for over 60% of the silver mining (Peru and Mexico), are shut down.

Remember what I said about “silver is in everything”?  It is.  I just read how Tesla just had a record month in Shanghai creating over 3,000 cars.  We’ll come right back to this.  What I want you to remember is demand of silver is not really lacking right now.

So – the dollar has been going UP.  As people are fleeing the stock market, they normally go to the 10 year treasury.  They are now uber low and negative yields.  They are converting to dollars.  They are cashing out stocks and converting to dollars.

In the short term, this has the dollar going up against all other fiat currencies.  But – what you are about to find, as they print money at will, this causes inflation.

But the dollar is up??  Why is gold up?  Well…….wait until the dollar starts to deflate.  You want to see action?  Get on board.

Enter silver and gold – the ultimate hedges against inflation.

But wait.  What about the mines?  The supplies?  China is going to want to produce goods?

I see a sharp….sharp….sharp increase in spot price coming up for silver.  Gold will be gentler over time.  But if you are Toyota, and you plan on producing 50,000 cars next month and the month after – and you see miners are in the shitter, you may actually buy more now than you need.

This is what happened in 2011.  Silver shot to $50 per ounce.  And shortly thereafter, mining stocks launched into orbit.

I do see a supply crunch, and it’s unclear how this will play out with the COMEX and futures markets with everything shut down.  Will Toyota take massive deliveries from the futures markets and drive up futures?  Will the spot price move with futures?

If there was another time for $50 silver, this is it.

Interestingly, it’s also a good time to buy miners.  With them shutting down and metals prices deflated last month, all of them sharply went downwards.  As metals prices rise over the next 4-8 weeks, I see miners prices increasing exponentially.

 

You can see the silver price chart on the left and the gold to silver ratio on the right.  One key aspect here is that they say there’s equal amounts of gold and silver above ground.  Yes.  Kind of.

  • 97% of all gold ever mined is still in existence.  Most of this is found in bars, coins, and jewelry.
  • Less than 50% of silver ever mined is in existence.  A lot of the silver above ground is in electronics and cannot economically be recycled, so it goes to dumps.

So while people may demand delivery of gold, the bars are in bank vaults.  The same really isn’t true for silver.  Everyone knows JP Morgan has a giant stash of silver, but – what happens if all of these contracts now demand delivery?

To make things even more complicated, a lot of ETFs and derivative funds out there may not actually be tied to physical silver/gold.  So I’m going to try and get out of any ETF positions I have in the coming weeks due to some more economic volatility that may be around.

Long story short in all of this – I fully expect a wild upward ride in silver in the upcoming weeks.

  • With China demand for production coming back online, they want silver.
  • No mines, refineries, or mints have silver.  Most of these commodities these days are “just in time delivery” expecting the sourcing of everything will always be there.  This may lead the large manufacturers that use silver to double or triple orders ASAP to get what is there.  Or not.
  • You cannot find physical silver bullion in coins/bars at this spot price.  As spot price goes up, more may sell.  Right now, in times of uncertainty, people are buying physical silver at $25-$30 per ounce on ebay and the large bullion markets.  Think about that.  Everyone who is buying right now is buying at almost double the spot price.
  • Pension funds need to make 7% return by law I read somewhere.  Gold is the only thing this entire year up in money.  Big pension funds may move some money towards precious metals.
  • Silver has massive upside potential.  Just ask hedge fund manager Ray Dahlio.  I could see institutional firms move small amounts towards it.
  • Apple could buy the entire available above ground silver market 7 times over.  This shows you how price sensitive the market can be. Small supply issues will have massive responses to price sensitivity.

I’m also expecting a lot of things to open back up in May.  It will take some time for mines to spin back up, get products to refineries, and get them available on futures contracts and out to mints.  Miners could catch some high prices per ounce in June/July, and I think investors will see this come late April and May and rush to the mining stocks.

Look at what happened to First Majestic Stock in 2011 when silver shot to $50 per ounce.

AG

If you had bought silver in 2010 at $12 per ounce with premiums and sold at $49, you’d have been in the money!!  I’d say many bought at $14-$15 and sold at $25-$30.  Still double your money.

AG stock was at $2.5 per share in 2009 and near $25 in 2009.  That’s a 10 bagger.  What if you had bought all kinds of options?  That could have been nice!!

Point is – while holding the physical metal is nice, you can get a lot more action on the right mining stocks if played correctly.  Recently, AG took their proceeds from the 2016 spike and built something called an HIG mill.  This reduced their costs to produce an ounce.

With massive moves forward in prices anticipated – maybe they are shut down for April, start back up in May-ish.  Perhaps they are seeing $20, $30, even $75 per ounce prices in June/July?  Could their stock go from $6 now to maybe $12 in May?  $15?  $25?  Think about an options strike price with $5 per share on a stock that hits $25?  Nice!!!

3. Uranium.  Not going to go into that here and now.  Ran long with the silver.

4. Cruise stocks.  They are now trading at like $8 for Norwegian.  They were $60 before this whole fiasco.  So they are shut down for a month or two?  Maybe half their business comes back in 6 months.  Maybe a global depression hits and 20% are out of work?  That still means 80% are at work and many people feel cruises are a very affordable vacation option for even the lower middle class.  So maybe this stock in 2-3 years goes back up to $60?  Are you kidding me?  $8 per share?  Buy up.  Buy everything you can.  I’d say worst case scenario is you hit $12 in a year.  Or – perhaps they fold?  So what if you find $2000 in milk money in the mattresses to put into this at $8 per share.  The upside is $16000 back in a few years time.  If you buy options on a $7 strike price and the stock recovers by fall to $16, that is a massive, massive upside.  What if it bounces back with a bail out to $25 per share?  If you have gambling money, don’t go to vegas.  Don’t go to dirty Jersey at AC.  Don’t go to your local casino to lose $2000.  You want casino action?  Here it is folks.

Bare in mind – with everything above, there’s a lot on YouTube also talking about depression, “monetary reset” – I don’t know where all of this is going more than a few weeks or months out.  Here’s what I do feel:

  1. Production will resume for a lot of goods.  Maybe demand is 70-80% of before.
  2. Economic uncertainty along with a drained stock market will lead people to precious metals.
  3. Supply chains are screwed up.
  4. Inflation is going to happen.  Metals may see the largest upside in this first
  5. Food supplies are a little squirrely.  This may cause sharp increases in food prices.
  6. We have a determined president to get people back to work, ASAP.  This will have a positive effect on the stock market, even temporarily.  Here’s where you evaluate your NCLH options to cash out and if you want to hold for the long term when the fall might see another downturn.
  7. The president needs to keep the oil industry intact.  This deal needs to get done in the next 1-2 weeks.  BNO should rebound nicely.