By: Steven Menking, Independent Contributor
2017 is upon us. Will the long-anticipated monetary reset occur this year? With the passage of time the inevitable gets closer and closer, so the probability of it taking place in 2017 should be larger than last year’s probability. It may be possible for the current system to be prolonged, but that would require another exponential leg up in currency creation, devaluation, and debt. My hope is that the systemic reset will be quick and painless. However, the displacement of defunct, ubiquitous, and corrupt institutions never occurs without serious friction, and we are staring down the barrel of a disruption of unprecedented scale.
It is genuinely possible that we may enter a paradoxical endgame of superinflation, where all assets move up together – defying all fundamentals, historical correlations, and expectations – because of the self-reinforcing manipulation to push the system as far as it will go before it implodes. Timing is key here since it seems like the architecture of a new system could be cobbled together on short notice because the mechanisms are in place, but is also appears that the various key players are still positioning, bargaining, and making arrangement behind the scenes. We may not be ready just yet, but I’d put the chances of a reset as high as 30% and the probability of a significant monetary system or political dislocation at 60%. Those are rather nebulous chances though, because it would be challenging if not impossible to get everyone to agree on what either of those events exactly look like. I’ll keep you posted on what I’m seeing as the year unfolds.
My sincere expectation is that 2017 will mark the beginning of the greatest wealth transfer in history. The primary beneficiaries, in my opinion, will be those who have exposure to gold, silver, and bitcoin. There will be more commentary for me on the details of these asset classes and how to position yourself throughout the year. For now, let’s get down to brass tacks:
I own gold through an account on Goldmoney. The tradeoff I am accepting is that while I do not have physical possession of the metal, it is vaulted securely, unable to be rehypothecated, and is divisible for the sake of use in smaller transactions. I also own gold mining ETFs GDX and JNUG for leverage.
My forecast is that gold will make new all time highs above $2,000 in 2017. The sky really is the limit, but this prediction is aggressive enough. If gold gets knocked down I will accumulate more through various channels. Every month I save and every month I accumulate actual assets in preparation for the monetary reset and wealth transfer. A slow and steady approach allows me to avoid being emotionally whipsawed by the day to day price action.
I own physical silver and am positioned to capture leveraged gains through mining finance company SLW. My accumulation of silver started in spring of 2015 and will continue. When the price suppression comes off of silver the price action is going to be difficult, but for now I’m just building my holdings and waiting.
Like gold, I expect silver to break above $50 to make new all time highs this year. The exact timing is either a matter of educated speculation, or inside information. Since I don’t have the latter and don’t want to spend much time on the former, let’s just say I think that silver has been a strong buy for a couple years from a long term perspective. How everything shakes out remains to be seen, but now is the time to position yourself if you are not already involved.
Bitcoin doubled in 2016 and I expect it to double again in 2017. It would have been great to get involved earlier, but I did manage to start accumulating before the recent run up back to the all time highs led by Chinese demand on significant volume. Overnight the price took a massive hit, and I used that as an opportunity to grab some more. A word to the wise: bitcoin is still tremendously volatile. My recommendation is to have some exposure to the premier cryptocurrency because of its fungibility and convenience as well as the disruptive power of blockchain technology. If we get another significant dip back to the trendline at $800 or below I’ll grab some more.
It’s extremely important to diversify across the different potential forms of real money that could rise to prominence in the new monetary system. Rather than get into the debate between the three instruments, my recommendation is to own all of them in various forms to insulate yourself against as many risks as possible. Don’t invest in anything that you don’t like or you don’t understand because you’ll mess it up: that’s a guarantee.
Please feel free to reach out with any questions. I’d be happy to share specific portfolio allocations, but keep in mind that I’m just some guy on the internet and not one of those fancy, official financial advisors.