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aztecstargazer

Shifting Into Cash

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There has always been a three pronged approach to my investment strategy. Precious Metals, Stocks and FOREX are those prongs. I have not been into cash since I began investing. But I have been doing ongoing practice with a FOREX practice account. The reason for this is because I have been expecting a massive turn around in the stock market and the overall economy, here in the USA. Again, I have never made it a secret about how I feel about Donald Trump and the Republican party. So I am preparing for the inevitable crash. Which is why my primary position is in Silver. The other half of my position WAS in a few stocks.

This recent market drop has prompted me to move out of all of my stock positions. I don't think this is the worst of what is likely to come. It is in my opinion just a trip before the fall. The next phase of my strategy is likely to be implemented sooner than I'd have liked, but it is what it is. I don't know what the state of the Euro/British stock markets are looking like. So if anyone has some insight as to what the general mind-set of these two markets is, please let me know. This is so I can shift into either trading EUR or GBP currencies.  I might even look to go into a more emerging market like India. Any feedback would be appreciated.

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I'm no trader, but I think Euro and Asian markets are going to follow the US if we keep dropping.  Dollar/cash will probably spike on supposed safe-haven status.  But the fireworks for PMs won't start until the Fed steps in and promises to save the world.  I haven't been a big fan of silver in the past few years (compared to gold anyway), but I may start loading up on some cheap silver (Eagles probably) soon.  Interesting times for sure

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I dont think you can link the coming crash to Trump and the Republican party. Pressure has been building for years, the pop has just been kicked down the road by Trumps tax policies, and he was an idiot for claiming credit for the market increases.

Of course, this crash will be pinned on him, and the sheeple will fall for that line, despite the fact this has been on the cards for years.

I dont have advice as to the state of the Euro/Uk stock markets, except to say Im not touching stocks of any kind for a while, at least until we see how the next couple of years plays out. I do want to increase my silver and gold positions, just bought a little more gold in fact.

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Peter schiff ultra bear top investments are in precious metals, precious metal miners and emerging markets. There is some simple logic to it. Historically what gave a nation wealth? It wasn't debt to gdp ratios of 150% and the ability to print currency.  

Emerging market demographics are the main reason to invest in them, but there are other fundamental considerations too. If you are looking for an asset to hold into a crash there isn't one when you measure in fiat - everything will fall - perhaps instead look at what is real and what will be left afterwards capable of generating wealth, and by wealth I just mean stuff. Poor nations in real terms are the ones with enormous debt piles and trades deficits, producing no stuff, they are going to be hurting the most when things turn, the damage done to their economy is by all the market props, government induced bubbles/oversupply due to greedy democratic politics, government induced under investment due to over regulation/democratic politics - all of it has put them in a very bad position when the rug is pulled. They will be very slow to recover. 

Historically was wealth generated by aging demographic de-industrialised nations with enormous trade deficits and habitual government overspending, economically destructive politics driven by democratic greed, populations that are entitled and therefore reliant on the state - or was it nations with a growing capable workforce, plenty of commodities in the ground to extract and the willingness to do so, the ability to trade value for value, and gold in the vaults? At least the US has its gold.  

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7 hours ago, KDave said:

 Poor nations in real terms are the ones with enormous debt piles and trades deficits, producing no stuff, they are going to be hurting the most when things turn, the damage done to their economy is by all the market props, government induced bubbles/oversupply due to greedy democratic politics, government induced under investment due to over regulation/democratic politics - all of it has put them in a very bad position when the rug is pulled. They will be very slow to recover. 

 

Regulations exist for a reason. I usually attribute the disdain for regulations to a lack of understanding in what I call "cumulative error effects". If one person does something wrong, every now and again, true it won't have a major negative effect. But the problem is when too many people have this same mind-set, and the compound effect begins to pile up and lead to an actual problem. Over hunting is the comparison I usually like to use to help people understand why regulations exist.

Then there are greedy ass holes who deliberately put people in harms way for the sake of profits. The example I use is corporations dumping toxic waste into a public water source, because disposing of it properly is too expensive. 

If you have a problem with regulations, you should stop directing your anger at regulators. Instead you should be outraged at the dick heads who put people at risk or felt they had more right to public resources than everyone else.  

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If you believe there is going to be a big crash then you should be ready for it and you should take advantage when it comes! You already have an investment account, imo the USD is overvalued though it is backed by the best military.  In the UK we have already taken a bit to our currency, the boe statement comes out this week if they increase most say they won't yet the ftse will drop this will be better for savers like you said and some of that free money will disappear. 

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The hunting analogy is a good one to describe why regulation is necessary and it's difficult to determine where the balance, difficult to draw the line what is over regulation. I am talking overall of unnecessarily making industry uncompetative so that another nation takes home the prize.

An example of what I mean. In the UK we are not using as much cheap electricity out of claims its production damages the atmosphere, all during a period when other nations continued opening coal power stations at a rate of one a week - what have we achieved but made our nation poorer. Our aluminium industry has gone as it is no longer profitable, requiring enormous amounts of cheap electricity. Someone else took the prize. Our other industries are being squeezed under the same principle, our people have bigger bills, we are poorer for it. 

Which countries have benefited - find them and invest there, generally speaking.

Edited by KDave

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I would say this about tlhe environment regulations in the UK,

The UK pretends it's getting green by exporting heavy industries to other countries then importing the finished products, this is wrong the UK is still producing the items really as the demand is still in the UK so the environmental effects should be shouldered by the UK for the product it imports.  This would be a true free market tag. 

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Exactly. Sure the emissions in the UK are less, but the environment is no better off when someone else takes up the slack and gains the benefit. Good Politics. Poor economics. 

Electricity is also the equivalent of economic leverage. We use it to allow a person to leverage up their productivity, put the cost of leverage up and they produce the same amount but invest more to produce it, net loss equivalent to the increased cost of electricity. Economic self harm. Why do we continue this madness. 

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Although cash is trash , I think having an allocation of cash is a good idea, I am on the offensive for cash and the end game will be to use the cash to bag some bargains.

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Cash is king ... sometimes.

In 2008 when the price of everything was falling through the floor, that was actually the price of cash INCREASING.  It's hard to see, however, because cash is priced in cash, so the way to see it is to watch when everything moves in the same direction - housing, fuel, precious metals, stocks, your neighbors car, pretty much everything.  During a market downturn like 2008 cash gets more scarce because people who are losing "money" (electronic blips that they say they are rich) suddenly worry about making their mortgage, so they sell stuff for cash .. or, if you prefer ... they use stuff to BUY cash.  That buying of cash along with the destruction of not-really-cash (bonds, stock, derivatives) results in cash going up in price, it buys more.

I think we are headed for that again, soon.

If you turn the stock market graph upside down so that the recent highs are at the bottom, it looks almost like capitulation when the market is trying to put in a bottom so it can change directions.  It's characterized by a sharp sustained fall, panic selling (or in the case of a top panic buying), and then a reversal.  Could that be the beginning of the end ?  I've always believed we'll have a blow off of a top to this multi-decades long bull market.  Maybe this is finally it.

As for Trump, Trump has little to nothing to do with it.  Same as Obama had little to nothing to do with the reversal from the Bush days, and the same as Bush had little to nothing to do with the market reaching an intermediate top and then taking a hit in 2008.  Markets do what they do, and if anyone can influence them its the Federal Reserve, but mostly they crash because they reach tops, and they recover because they reach bottoms, and then trade everywhere else.  Markets don't run on Trump tweets, they run on fear and greed, same as they always have.

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