Doug Casey: "Sell All Your Bonds"

Tyler Durden's picture

Via Casey Daily Despatch,

[The following essay originally appeared in this month’s issue of The Casey Report.]

So, Trump has won the election. Of course anything can happen between now and his presumed inauguration on January 20. Maybe the Swamp Creatures will succeed in causing a recount in so-called Purple States that could change the number of electors in Hillary’s favor. Maybe they’ll somehow influence Trump electors to vote for Hillary. None of this would have been an issue if Baby Bush II, Jeb, had been the Republican nominee, as was supposed to have happened. It all just shows what a transparent (a word these people love to use) fraud “democracy” has become.

Let the hoi polloi cast a meaningless vote, so they have the illusion of being in control. Instead of seeing themselves as subjects, they’ll think they’re “we the people,” who actually have some say in what happens. That way they’ll pay their taxes willingly, enthusiastically sign on to aggressive wars on the other side of the world against people they know nothing about, and generally do as they’re told. Because it’s supposed to be patriotic. “Democracy” is a much more effective scam for controlling the plebs than kingship or dictatorship.

That said, the Establishment, the Deep State, was genuinely shocked and appalled by Trump’s victory. As Baby Bush the First would have said, they misunderestimated how angry the average voter was. That’s because the Coastal Democratic Elite are totally out of touch with the common man. But they needn’t fret too much. They’ll be re-installed, with a vengeance, in four years.

That will likely be true for two reasons:

  1. Simple demographics. The groups that vote Democrat (e.g., blacks, Hispanics, urban dwellers, immigrants, Millennials) are growing in numbers faster than those who vote Republican. Republicans are older people, and the Boomers (born 1946–1966) and the Silent Generation (1926–1946) are dying off. More people are moving to the cities, and that influences them to vote Democratic. More people (still, idiotically) are pursuing higher education, and that also influences them to vote Democrat.

  2. The Greater Depression. One definition of a depression is a period of time when distortions and misallocations of capital are liquidated. A time when bubbles caused by monetary expansion are popped. A time when unsound businesses fail. I re-emphasize this because the party on whose watch it happens is automatically kicked out. So, the Democrats actually got quite lucky not to be in office when the time bomb goes off. Trump could easily go down as Herbert Hoover II.

What could change things? A serious war, much bigger than the sport wars the US is currently engaged in, is the biggest danger. That’s much less likely with Trump than Hillary, but these things have a life of their own. My guess for the next president is either a left-wing general (because Americans love and trust their military), or a left-wing populist, like Elizabeth Warren.

But that’s crystal balling at this point. Let’s proceed on the assumption Trump is actually going to be the president for at least the next four years. Although problematical, he’s a vast improvement over Hillary. What will it mean for the US and the world? More importantly, what will it mean for your personal finances and freedom? Let’s look at the possibilities.

Bonds—With bonds, we’re at the peak of the biggest financial bubble in world history. This is a very big deal.

 

Interest rates move in very long cycles. They went up from the mid-1940s to the early ’80s, when long-term government bonds peaked at close to 16%, and T-Bills at over 16%. I thought they hit bottom years ago, but the cycle overshot.

 

My guess is that they’re headed up in earnest now. And Trump, as someone who understands business (even though he doesn’t understand economics), will likely (I think…) do what he can to send them higher. Why? He understands the country needs to save, to rebuild capital. And higher rates will encourage saving and discourage debt.

 

The risk is that, with all the debt that’s been put on in the last decade, debtors will be hard-pressed to service it. That includes the USG with $20 trillion of on-balance-sheet debt, and a lot more in the way of off-balance-sheet debt, guarantees, and contingent liabilities. Much of it will be activated if higher rates cause a lot of defaults.

 

What should you do? Sell all your bonds.

 

Real Estate—Property, at least in the English-speaking world, floats on a sea of debt. Interest rates go up, real estate prices go down. The economy goes down, so do property prices. Add to that the aging US population, which isn’t good for property; as people age, they downsize. Add to that the fact we’re in another real estate bubble, similar to what we saw in the mid-oughts. After bonds, property is likely the worst place to be. In fact, I’ll go so far as to say the great post–World War II property boom is at an end—but that’s a subject for another time. There’s not much that Trump can do to fix this.

 

What should you do? Lighten up on property. Make sure any mortgages you keep are at fixed rates.

 

Stocks—If Trump only follows through with his promise to cut taxes, and eliminate two old regulations for every new one, it would be wonderful for the economy. But the economy and the stock market are two different things; they only correlate over the long run. I suppose he’ll follow through with his promise to build lots of new infrastructure. Government deficits will soar, and only the Fed will be on hand to buy all that new debt.

 

Infrastructure companies will get a fat slug of the newly printed money. But I find it hard to get enthusiastic for the stock market. In terms of dividends, P/E ratios, or book value, it’s already at one of the highest levels ever. Bear in mind that well-selected stocks can still go up, even if the market as a whole goes down.

 

That said, I feel more comfortable with shorts than longs at this point.

 

Gold and Commodities—Frankly, where do you put your money when almost everything is overpriced? Commodities are coming out of a five-year-long bear market. They’re about the only thing that’s cheap. That’s true relative to their cost of production (farmers, ranchers, and miners are breaking even, at best, all over the world). And it’s true relative to their history (they’re down 50% from the peak of 2011).

 

In other words, commodities are a much safer place for your capital than stocks, bonds, or real estate (excepting agricultural property) for the foreseeable future. The problem is that it’s hard to hold a carload of wheat or ten tonnes of sugar.

 

Remember that gold and other commodities aren’t “investments.” An investment is something that acts to create new wealth. They’re simply assets. Sometimes they can be excellent speculations. Gold, however, is money, and will remain so long after the US destroys its currency.

 

I recommend, therefore, that you accumulate gold and silver instead of plunging into conventional investments. Check with the dealers we list in The Gold Book to see who you prefer to work with. [Editor's note: The Gold Book is exclusive to readers of The Casey Report, which you can sign up for at the end of today's essay.] But if you don’t have a significant position in the metals already, please get going.

A final thought. It’s usually a mistake to count on any head of state to make things in a country better. It can certainly happen—as with Erhard in Germany after WW2, Pinochet in Chile, Thatcher in Britain, or even Reagan in the US. Maybe it will be true of Trump. He’s got a much stronger personality than Reagan, for openers. But the bigger and older a State gets, the harder it is to change. It’s comparable to trying to stop a fully loaded supertanker.

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J S Bach's picture

Escape your Bondage.

hedgeless_horseman's picture

 

Sell all your bonds?

What happened to "Hold to Maturity"?

You can change horses in the middle of the motherfucking race!

That is what happened.

Don't be stuck riding a 1% payment for the next 9 years.

DirkDiggler11's picture

HH, I truly miss your 12 Days of Christmas recommendations...

hedgeless_horseman's picture

 

Sorry.  I have it in the can at the office, but haven't been motivated to post it.  Maybe tomorrow. 

Merry Christmas!

DirkDiggler11's picture

And a Very Merry Christmas to you as well !

Save_America1st's picture

Greg Mannarino has been saying this for 2 years.  Many others have too.  Watch bonds...the bond apocalypse is coming...just a matter of a litte bit of more time.

C'mon...there's no reason to think the Trumpinator or anyone else could/can stop this from happening, bitchez.  It's just going to fucking happen, plain and simple.

s2man's picture

Merry Christmas?  You guys are so Politically Incorrect.   Merry Christmas,  bitchez!

"Remember that gold and other commodities aren’t “investments.” An investment is something that acts to create new wealth. They’re simply assets. Sometimes they can be excellent speculations. Gold, however, is money, and will remain so long after the US destroys its currency."

I couldn't have said it better.  Stacking is not investing,  it is buying assets.  The last time I took money out of my 401k the girl asked,  "May I ask why?".  I said, "Umm,  I invest in a lot of hard assets."  I got three more acres, a tractor and a barn, this year.

The two biggest bubbles are USD and TSYs.   When they pop,  Woooo!,  those will be interesting times.

DirkDiggler11's picture

I have noticed that Tyler(s) has stopped posting the bullshit broken record articles on predictions from Jim Rogers and Dr Marc Faber. If we could just rid ZH of asshats Simon Black and Doug Casey will will have effectively "DRAINED THE ZH SWAMP" .... thanks for listening to the peeps Tyler(s).

DD

algol_dog's picture

Phoenix Capital is still bringing it. God love 'em ...

mary mary's picture

I subscribe to Dr. Marc Faber.

GreatUncle's picture

Silencing the voice is no differenrt to censorship.

The other thing is an article can present even if so ridiculous the other side of the coin.

Without it you are not spending the coin.

JohnGaltUk's picture

This should have collpased long ago.

We didnt know that they would print money, buy bonds, buy equities and in Europe you have the ECB acting as future capitalist now.

If someone had told me all this back in 2007 I would assumed he was on drugs.

cat2005's picture

Dirk Diggler! Great movie! LOL.

Stanley Lord's picture

Let the hoi polloi cast a meaningless vote-stopped reading right there.

Beltain's picture

Who besides pension funds is still in bonds anyway?

 

That being said I don't think Trump got as much support from the so called baby boomers as this article suggests. Far too many of the boomers who gobbled up or created millions of make work government jobs out of thin air were counting on Klinton to keep the gravy train going. Especially the white female feminist and their beta male slaves. It was the Gen X and Millennial who were born too late for the ponzi scheme and are being stuck with the bill that supported Trump in droves no matter what the so called exit polls try and paint.

 

mary mary's picture

As a baby boomer, I believe everything you wrote about baby boomers is mostly wrong.

Archive_file's picture

That's because you ARE a baby boomer.

Mustafa Kemal's picture

No, couldnt be. Im a baby boomer and I think he is on the money

mary mary's picture

Yes, and, being a baby boomer, I have been around for over six decades, and have done a lot, seen a lot, read a lot.

I have also paid a lifetime of taxes to keep things going for the younger generation, many of whom now seem, strangely, to want 8 more years of outsourcing, foreign-worker visas, paying welfare families to create more welfare families, silencing of independent press, foreign wars of looting, and all manner of similar things which hurt - the younger generation.

JohnGaltUk's picture

I was born in 1963 so one of the last baby boomers and I totally agree.

The baby boomers are the most self deluded bunch that have ever lived. They have acted like self indulgent rich children that have spent their inheritence. Over the years I have tried to explain to them how immoral their behaviour is. Here in the UK we have borrowed and borrowed so we can do the consuming and then hand that debt on to your children, and you want to know something, they dont give a sh1t. They are stealing their own childrens future, freaken socialist are nothing but canabils.

There is no difference between and NHS Hospital or a pryamid, some poor slave is going to have to pay for it.

Baby boomers are the most FCUKed up bunch I have ever met and their deluded attitude of entitlement is sick.

Tenshin Headache's picture

"The groups that vote Democrat (e.g., blacks, Hispanics, urban dwellers, immigrants, Millennials"

You, sir, are guilty of identity politics. Why can't these groups vote Republican? I believe they will when Trump's economic reforms kick in.

markpower49's picture

You sir, are a PC idiot. In multicultural societies, identiy politics is the ONLY politics. Vote your tribe or perish.

cat2005's picture

Yes they could but how likely is it? Even with a good economy, non-economic factors always influence voters.

buzzsaw99's picture

Oh no, not by the hair of my chinny-chin-chin. [/Pig]

Bam_Man's picture

The financially-illiterate Doug Casey obviously does not understand the VERY close relationship that exists between Velocity of Money (MZM Money Stock) and Interest Rates.

Monetary Velocity has been falling (with interest rates) for decades and will continue to fall as the US population continues to age.

Demographics are now destiny. It won't matter one iota, however many Mexican and Syrian immigrants they bring in. Too late, already "baked in the cake".

"Sell all your bonds" is one of the LAST things you should do right now.

JCJames's picture

This guy Casey makes money doing this? He seems in a world all his own. I read a few of his news letters back in the 90s and figured he'd be a fly-by-night short-lived operator, but he endures. He and Porter Stansbury of the Oxford Club,in the same racket, are just fear mongers. I can usually tell a Porter Stansbury connection when it has a PO Box 925 Baltimore address. Hard to believe Casey's making money.

moorewasthebestbond's picture

Talent is lacking everywhere. Just look at Hollywood and Capitol Hill.

pachanguero's picture

Doug Casey pilled into Argentinian real estate at the peak.  He lost his ass twice. Then he doubled down.  This guy is a one trick pony.  But even a broken clock is right twice a day.

moorewasthebestbond's picture

Occasionally the sun shines directly on a dog's anus.

cat2005's picture

He does have it right on some things but I agree that his libertarianism is too much for my taste. It is a good idea but I think he takes it too far at times. I view him as I view others like him: In the long term his views will be correct but in the short term, be careful.

JCJames's picture

"A final thought. It’s usually a mistake to count on any head of state to make things in a country better. It can certainly happen—as with Erhard in Germany after WW2, Pinochet in Chile, Thatcher in Britain, or even Reagan in the US."

Pinochet made Chile better? And he's in same class as Reagan?

MK13's picture

Yes, Pinochet made the country better. Left will never allow you to think that - while eulogizing Castro. Yes, he killed a few leftists, but judging by World wide media, not nearly enough.

That Libral You Hate's picture

"Yes, Pinochet made the country better."

Lol anything Castro did bad, Pinochet did worse.  He didn't just kill a few leftists, he kill and tortured a bit of everyone from all ends of the political spectrum, and also crushed democracy itself in his country.  The coup he launched was to overthrow a democratically elected government that was widely popular with the people of Chile.

The worst of communist countries like East Germany were the secret police like the Stasi.  Pinochet's DINA was every bit as bad – who cares whether it is called "communism" or not, if it brings all the same problems as bad or worse, then it is just as bad or worse.

Pinochet even tortured and killed people from other countries like Spain.  The only reason he hasn't been punished for his crimes is he was to impervious a dictator right up to the point where he got dementia and then died.

The only plus people list for him today is "he helped the economy."  By which they mean he looted the country for US corporate interests making a small amount of locals complicit in the process extremely wealthy while making the majority of the country vastly more impoverished and unequal.  Funny thing about GDP, by designed it can go waaaaaaay up when looting a country.  If you look only at GDP without looking at many other important economic factors like Gini coefficient you aren't getting the real story about the economy for the majority of the people in said economy.

The second Pinochet started loosing power (and eventually dyeing) the populous used their (partially) restored democracy to work overtime to elect as many people who had opposed Pinochet (including many who were tortured by Pinochet such as their current president) into the government as possible to try and start repairing the country by undoing as much of what Pinochet had done as possible.

The only people who ever had anything positive to say about him were those who were getting benefits from the new status quo he started, the US corporations and affiliates whom he helped loot the country, and the CIA and friends who funded and backed his coup to overthrow and subjugate a democratic nation.  While he still has supporters that revere him today (only those that got part of the spoils of the country Pinochet helped loot) most of the political groups that once considered themselves his heirs now work hard to distance themselves from him because he fucked up things so badly.

cat2005's picture

He killed more than a few.

markpower49's picture

Yes, Pinochet was a great leader. He gave helicopter rides to leftist filth.

absente reo's picture

Fuck me at the end we find out his angle. Fucking goldbug. 

Always it is time to buy gold with those fuckers. 

Herdee's picture

No, Pinochet is in the same class as Hillary Clinton. Just another warmonger. Throw in John McCain, another idiot.

alfbell's picture

Don't listen to anyone. It's all lies. The American establishment and government's evil players need to be stood up against a wall and shot. All of them. We need to rid our nation and the world of these evil insane psychotic scum.

What the West has done to Syria: the destruction of its cities and infrastructures, the countless dead civilians, the innocent children who have been raped, mutilated and killed, etc.

Obama, Hillary, McCain, et al should all be drawn and quartered, boiled in oil and burned at the stake and their ashes buried in a deep hole in the desert. EVIL, PSYCHOTIC, INHUMAN, MONSTERS.

ZeInfidel's picture

who still listens to this guy??? he's been nothing but wrong for the last 5 or 6 years.

mary mary's picture

That's right.  Everyone born 5 years ago has lost money.  But I was not born 5 years ago.

JBPeebles's picture

Yeah, wondering about whether I've got to sell more gold tomorrow because the banks are levering up their naked shorts at the Comex.

Flushing out the weak players. Guilty as charged. No worries; we know about the Single Cell economy which is built around financial industry profits. The top is doing well; Goldman shares are up 50% in the mandatory post-election intervention window which is rapidly, we hope, closing.

Those that bought paper gold are vulnerable to the derivatives created in such volume that every ounce of physical gold available at the Comex now has over 500 claims on it.

So technically we could have an explosion in gold if a small percentage demands physical delivery (a la Max Keiser and silver at JPM.) The urgency with which this recent gold takedown has occurred could indicate physical supplies are very low. Made to sell, players on the margin can fork over enough real gold to cover redememption requests and offshoring, at least for a little while.

Fractional reserve gold is jut as precarious as fractional reserve banking. In both cases, the worth of accounts is not an indicator of their value should depositors ask for their deposits. Under such a scenario physical cash and gold would become unavailable.

I suspect whatever gold is being bought is being sucked up by the lack of physical supply. Most dealer vaults don't have too many coins;they're going to Asia or maybe into the new Islamic gold standard. India's money games have increased the premium on gold there; a similar situation is unfolding in China.

Just keep buying if you won't need to sell. Secure and safely store physical only.

buckstopshere's picture

Bonds are only as good as the liars who sell them.

cpnscarlet's picture

Oh, the money I lost on his Natural Gas recommendations! No thanks, Doug...find another fool to love you.

 

monad's picture

How Do You Know That Zero Hedge is a Russian Information Operation? Here’s How

http://streetwiseprofessor.com/?p=8947

The Wizards have spoken. You Voted Wrong. Now, the CIA will come in & fix it for you, even if they have to kill every last one of you, for your own good. Its their thing.

Newspeaktogo's picture

Tucker Carlson justed debated a guy that behaves a lot like Moonbeam.

http://www.breitbart.com/video/2016/12/15/fncs-tucker-carlson-takes-news...

honestann's picture

Doug Casey is a very smart guy, and I appreciate that he says a lot of things in a direct way.  However...

Consider what a few "tweaks" on the future might mean.

#1:  SUCCESSION
Assuming Trump gets into office, what if California succeeds from the USSA?

Don't laugh.  Do you think Trump would object?  Do you think congress would object?  Well, they would probably PRETEND to object, but consider... what happens if California succeeds from the USSA?  Well, the first and most obvious thing that happens is... the number of democrat electors would DROP SUBSTANTIALLY.  Which means, Republicans would have a MUCH easier time to win.

Also, a more likely scenario is, the USSA breaks into 4 pieces.

#1:  The northwestcoast (Washington, Oregon).

#2:  The southwestcoast (California up to Napa or a bit further).

#3:  The northeastcoast (Maine through DC and perhaps one more state southward).

#4:  Americana AKA "everything else" (including at least 200~300 mile wide piece of northern California).

It would obviously be necessary for northern California to be part of "Americana" to prevent the moocher-liberals of the west coast from charging obscene fees, duties, shipping or export fees for products imported or exported into/outof Americana.  And to get the deal done, this would happen.

So what would this do?

Answer:

#1:  All politicians would be liberals.

#2:  All politicians would be liberals.

#3:  All politicians would be liberals.

#4:  Most politicians would be conservatives or libertarianish.

The consequences...

Most producers would move to #4, start businesses, and produce.

Most parasites and predators would stay-in or move-to #1, #2, #3, and live on handouts.

!!!!!  THIS WOULD BE GREAT  !!!!!

Why?  Because it would provide a SUPERB demonstration of:

#1, #2, #3:  the consequences of "warm, fuzzy socialism".

#4:  the consequences of "cold, hard, mean, nasty liberty".

!!!!!  AND THIS WOULD HAPPEN IN THE MOST BEAUTIFUL MANNER  !!!!!

How so?  Because #1, #2, #3 are relatively RICH now.  And #4 is relatively POOR now.

That's a perfect way to start this "test".  Over time (only one or two decades, probably), #1, #2, #3 would become POOR and a SHAMBLES, and #4 would become RICH, MODERN, BEAUTIFUL, PROSPEROUS.

Well before two decades pass, young folks making their decision of which kind of political philosophy to adopt would no longer be able to avoid seeing THE CONSEQUENCES OF THEIR CHOICE.  And those who want a good chance to live some approximation of "the good life" would move to #4.

And assuming the neocon-jobs haven't totally destroyed or enslaved planet earth, this very visible experiment could finally provide more than sufficient evidence to swing the pendulum back in the direction of liberty and individualism (assuming Americana doesn't let statists sneak into their developing semi-paradise and take it over like they did with America).

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#2:  HONEST, LAWFUL ELECTIONS

Or here is another possible tweak to the scenario.

Trump gets into office, and he and republicans (and any honest democrats that may or may-not exist) pass laws (or change constitution) that make elections HONEST and FOOLPROOF.  This would require several simple steps, including:

#1:  Require 100% paper ballots hand marked with pens in all elections.

#2:  Require every ballot contain (in some form) the identity of the voter.

#3:  Require every voter go home with a copy of the ballot they submitted.

#4:  Require every voter prove they are eligible (citizen and otherwise eligible).

#5:  Require post-election checks to assure no voter voted multiple times (in 1+ state).

#6:  Require that ballots be kept safe for at least 20 years (then be stored electronically).

I am probably forgetting one or two other requirements to assure elections are not bogus.

Disclaimer:  Yes, "lawful" is a bogus, fictional concept... but speaking about that fiction here.

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With just a tiny bit of unconventional thinking (and action), the future can be massively altered.

The MOST insane, unhealthy, destructive future is what the NWO/neocons/globalists/establishment have in mind.  But those individuals who would move things in any other direction are so grossed-out by the very notion of a few individuals determining how the entire planet full of human-chimps operate is too disgusting to consider as a model for their individual, personal actions.

Joe Wazzzz's picture

There are three obvious problems with your otherwise excellent assessment of the break up. The northeast going super liberal creates a socialist gauntlet up the St Lawrance river that could control all commerse and naval traffic out of the Great Lakes much like the Straits of Bosphorus does for Russia. That would cripple commerse from the middle states significantly and who would enforce freedom of commerce through there?

The military would have to be divided up too which is hard to imagine.

The second thing is that as soon as #4 begins to show signs of being prosperous and the others began to wane, the same forces that caused all the trouble in the first place will migrate to positions of power and influence and begin to agitate and proselytize their liberal agenda like they have done time and time again around the world.

Skiprrrdog's picture

Obama's birth certificate was proved to be a FORGERY by expert forensic examination, as announced live at a press conference yesterday by Sherriff Joe Arpaio

https://www.youtube.com/watch?v=yuhF-Ok3djI&app=desktop

Why isnt ZH, or ANYONE talking about this?

brushhog's picture

Buy low, sell high (sounds simple but its very hard to do in practice ). What we are coming into is a big buying opportunity. What should you buy? Whatever crashes the lowest. This will go against every fiber of your being since most people will be fleeing these assets.