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Dear Fellow Investor,
As I told you last week, New Orleans 2018 was truly amazing.
Once again, our speakers brought tremendous value, and it was so gratifying to see hundreds of old friends amongst our attendees, all eagerly devouring the information we were able to present.
I was talking with my long-time friend Lawrence Roulston in our speaker “green room” at one point, and I shared how much I enjoyed picking speakers that I really liked, but who were perhaps largely unknown to our attendees, and seeing the crowd appreciate the insights they brought.
Then Lawrence noted what a big impact my simple act of speaker selection had on so many people’s lives, and what a great responsibility it must be.
I thanked him for taking a fun part of my job and positioning it as a big responsibility going forward — like I needed any more stress!
Anyway, it is a big rush to watch experts for whom I’ve become a big fan deliver valuable and sometimes unexpected insights to our attendees.
This year, I think Ben Hunt of EpsilonTheory.com was our surprise hit. I’ve been following Ben’s work all year, and love how he approaches today’s economic, investing and political scene from a different angle. In his presentation he noted how our politics have become so polarized, yet our investment markets have become so concentrated.
There’s big danger in both extremes, and one of those dangers is in the unexpected. When everyone in the markets is thinking and investing the same way, an unexpected event or narrative can come along like a thunderclap in a herd of cattle.
Suddenly there’s a stampede in the other direction and anyone in the way is going to get trampled.
So what’s unexpected right now? Ben uses “natural language processing” to examine the universe of articles published to pinpoint what everyone is talking about...and what they aren’t. Using these hard metrics to define the otherwise ethereal notion of investor sentiment, Ben believes the black swan for today’s markets is inflation.
As Ben noted, “I think it means we have to think differently about everything, and I’m as worried as anyone about the ‘three horsemen’...the Fed, China, and Italy, these event risks.
“But, what I want everyone to pay attention to is this fourth horseman, that no one’s really paying a lot of attention to today, and that’s our regime change in the way we think about inflation. It’s something we haven’t thought about for 30 years, but I think it’s coming back.”
A number of our speakers were also talking about the “everything bubble” that central bank policy has created in the world today. We had the tech bubble burst in 2000, and the real estate bubble collapse in 2008, and now that monetary policy has blown up all financial assets the risks to the global economy are greater than ever before.
Of course, Peter Schiff, Adrian Day, James Grant, Byron King and Dennis Gartman covered this risk factor well, as you’d expect. But perhaps the most evangelical and eloquent speaker on the topic was Mike Larson of Weiss Research, who coined the term “The Uber Bubble.”
The title of Mike’s presentation was “The Uber Bust: Causes, Consequences and Profit Opportunities,” and he covered it all. Like no one else, Mike was able to clearly present where the dangers lie — which sectors are so dramatically overvalued and why — in dozens of compelling charts.
What truly warmed my heart, though, was one of the sectors Mike recommended, as a generalist who focuses first and foremost on traditional asset classes.
“I'm not a gold bug, per se,” Mike noted. “There's times when I like gold, there's times when I don't. It really depends on what's going on in the markets, interest rates, and so on....This seems to me like a time when gold is beginning to make that turn. It’s beginning to bottom out. Some interesting patterns on the charts and so on.
“...I think that this is an environment that you're going to see more market events. More things like what we saw in January and February, with volatility and so on. I think that that increasingly chaotic market environment is what we're going to be dealing with for the next couple of years. That's the reason to own gold.”
My friend Peter Boockvar explained many of these same risks, but brought up another one that Chris Martenson and Adam Taggart of Peak Prosperity have also pointed out: the risk that rising interest rates pose for companies reliant on floating-rate debt.
Peter explained that “40% of the debt of Russell 2000 companies is floating rate, which means that it's tied to Libor, which means that every tick up in Libor raises the cost of capital for 40% of the debt on the balance sheets of Russell 2000 companies.”
That’s a huge, largely unappreciated risk. Many of our speakers noted that the primary reason the Fed is raising rates so aggressively is to get room to cut rates when the next recession comes. As Peter shows, these rate hikes are very likely going to create the recession they fear.
This is just a brief taste of what we enjoyed at this year’s New Orleans Conference, and I’ll have more brief insights in upcoming issues of Golden Opportunities, and a full recap in next month’s edition of Gold Newsletter.
As I said, I think New Orleans 2018 was one of the more interesting and valuable in our long history, especially since it provided some clear-eyed views — by extraordinarily insightful experts — during a period of extreme market turmoil.
In particular, I told many of our attendees that our speakers focused on metals and mining stocks, and our Mining Share Panel, would prove to be incredibly rewarding over the months ahead.
Our experts were more than willing to share their top picks, and the result was a list of the best of the best opportunities in the resource sector.
Again, priceless value. And fortunately for anyone who missed this event, or for those who want to take their time in reviewing everything they heard, our audio and video recordings will soon provide all of the juicy details.
The best part: These recordings do have a price, and it’s a minuscule fraction of the value they provide. For all the details, I urge you to CLICK HERE.
All the best,
Brien Lundin
Editor, Gold Newsletter
CEO, the New Orleans Investment Conference
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