FMT Advisory has one of the best trends records in the entire investment universe. We also have some of the best bottom-up research and industry connections in the world.
Our largest trend concern has only gotten worse, and that is our fear of long-term inflation running much higher than its medium long-term average.
When Brexit transpired, FMT Advisory knew the market’s initial knee-jerk reaction was entirely wrong. We were right. After two days of panic selling and market instability, the markets quickly reversed and headed past its all-time highs.
The market figured out what we already knew.
The Federal Reserve cannot raise interest rates in any material way – possibly ever. The Federal Reserve and almost every other central bank around the world have distorted real economic activity by keeping interest rates well below the real rate of inflation for so long that reversing course will be almost impossible now.
By keeping interest rates artificially low, economic demand is pulled forward in a big way. With low interest rates for an already unprecedented amount of time – and governments around the world piling on debt with their record-low borrowing costs, raising rates above the real rate of inflation will be impossible without destroying their artifice.
So central banks will simply not do it—raise rates in any material way, ever (though if they do, we’ll change investment positioning quickly).
And Brexit, or any currency negative outside the United States, only makes it that much harder for the Fed to raise interest rates at all.
And Then There is China
FMT Advisory alerted the world that the Fed cannot tolerate liquidity being drained from our system (after years of increasing our money supply) by China as we raised rates.
When markets crashed 10% in January for one of the worst starts to a New Year ever as China pulled their reserves out of our system in a big way, the Fed quickly backtracked.
Raising interest rates at all is clearly a big problem the Fed has on its hands. And that is why we believe long-term high inflation is the biggest risk.
The stock market didn’t unravel in the 1970s from high valuations until inflation soared above 4%. This is the most important point the investment universe fails to understand, in our opinion.
Many folks keep thinking the stock market is going to crash for one reason or another.
Our contention is that the most likely scenario creating a severe stock market correction will be that of high inflation crushing profit margins, share buybacks, and the cost of goods sold (COGS).
We can handicap that scenario with gold, silver, and oil. Gold, silver, and oil skyrocketed during the 1973-1974 stock market correction by over 300% during these two years the market finally caved to inflation in the 70s.
Gold, silver, and oil are still historically cheap based on seven different valuation metrics we analyze. Therefore, they are still heavily recommended by us as portfolio rocket fuel for a potentially high inflationary nightmare scenario playing out.
Since they are still cheap, however, we don’t need high inflation for these assets to continue to work-out.
Our number-one gold mining selection has been a huge winner for us.
Unlike most in the doom and gloom camp, we nailed the inflection points recently based on our value analysis on gold (gold analysis here) and oil (oil analysis here). Our favorite gold miner has been consolidating its huge gains, and has become by far one of the cheapest and best companies in the entire sector to buy again after its 150% recent rally.
We’ll profile some numbers for you soon in comparison to a few other highly touted miners.
No doubt though, FMT Advisory believes our number-one gold miner is perhaps one the best ways to get leverage to a rising gold price over the next two years. Today is another good opportunity to buy or add to the position at the cheapest enterprise value per ounce of gold that we can find anywhere on the planet!
This is a gold miner where the CEO has nearly 90% of his own net-worth in the shares. And why not? It’s one of the best ways to own gold with their shareholder friendly, per-share per-ounce-of-gold intrinsic value metrics.
For exposure to gold, this is truly one of the few companies in the entire sector worth owning. With gold miners still undervalued relative to the price of gold, it’s the best way to potentially maximize your results, make some money, and protect your portfolio and family from higher than normal inflation.
You can get on board with our New Economy Revolution, where we connect our money and our member-clients’ monies to the best assets – with the most exemplary teams compounding them, by simply starting your journey with our Fiduciary status and low-cost approach by contacting us right here.
Please tell your friends, family, and colleagues to join FMT Advisory’s New Economy Revolution.
CEO & Chief Investment Strategist