The Russian Bear Hits Wall Street: My Favorite Hedge(s) Against War
“What is the greatest danger to your investments? Inflation.” — Paul Cabot (p. 151)
“War is always bearish on money and stocks — and a good time to buy.” — Philip Fisher (p. 151)
Both quotes above are taken from the latest 10th anniversary edition of “The Maxims of Wall Street,” the bible of investing.
With Russian troops invading the Ukraine, the stock market is tanking and has officially entered a bear market.
The United States under President Joe Biden and the Democrats apparently appears weak, and President Vladimir Putin is taking advantage, just as he did when Russia took over the Crimea region of Ukraine under President Barack Obama in 2014.
For all his faults, President Donald Trump may have intimidated Putin and the Chinese. During his four years in office, neither Russia nor China attacked. But under Biden, it’s different.
In fact, China’s President Xi Jinping may be emboldened by Putin’s bold action and move against Taiwan. Only time will tell.
The Best Hedge Against War
What is the best safe haven during war? Traditionally, it has been oil, gold, silver, copper and other commodities.
I like gold and gold stocks, which have underperformed lately. Now they are taking off. I’ve been recommending both gold and silver in Forecasts & Strategies and in my trading services.
Since gold and silver were freed from price controls in the early 1970s, precious metals have risen sharply during military upheavals, including the Iranian Revolution in 1978; the Iran-Iraq war in 1979; the Soviet Union’s invasion of Afghanistan in December 1979; the Iraqi wars in 1990; the 9/11 terrorist attacks in 2001 and the U.S. conflict with Iraq in 2003.
Why is war bullish for gold and silver? Because war is inflationary. Government deficits skyrocket during wartime and are often financed by central banks by printing money.
As Julian Snyder wrote, “The impact of the rate of inflation on the price of gold is like tracking the footprints of an animal.” (p. 154)
Bullish on Energy Stocks
Another great hedge against war and inflation is oil & gas. Both have moved sharply higher in anticipation of a major conflict between Russia and the Ukraine. Oil is now approaching $100 a barrel, and natural gas prices, especially in Europe, are moving up by double-digits.
Russia provides more than a third of Europe’s supply of natural gas, with some of it running through pipelines in Ukraine.
In sum, I recommend investing in precious metals, mining stocks and energy companies during this geo-political crisis.
Is Copper the New Oil?
According to Goldman Sachs, there’s also a commodities super-cycle that is starting this year that could last for decades. One of the best beneficiaries will be the base metals, especially copper.
Goldman is calling copper the new oil. Copper prices are surging to $4.57 per pound and could move higher. Not only will it benefit from the new infrastructure spending around the globe, but it’s indispensable in global decarbonization strategies.
Beware of Volatility
But don’t go overboard on commodities. They are notoriously volatile. When the crisis ends, oil, gold and other commodities are likely to drop sharply. But right now, they are an excellent speculation.
At the same time, be prepared to profit on the upside in growth and technology stocks when the crisis is over. As John Templeton wisely said, “If you are a long-term investor, you will view a bear market as an opportunity to make money.” (p. 110)
Time to Consult the Bible on Wall Street
“The Maxims on Wall Street is a classic and should be consulted daily.” — Alex Green, Oxford Club
I’ve quoted quite a bit from my popular book “The Maxims of Wall Street.” There’s a reason why it has sold almost 50,000 copies and gone through 10 editions.
Chapman University students at my home in California. Each received a copy of “The Maxims of Wall Street.”
This week, one of my former students at Chapman University came up to me after class and thanked me personally for his copy of “The Maxims of Wall Street.” I gave an autographed copy to each student who took my class in January. “I’m amazed at the depth of wisdom of each quotation,” he told me. His visit made my day.
The book has been endorsed by Warren Buffett, Alex Green, Kim Githler, Dennis Gartman and Jack Bogle, among many others. Stockbroker Rodolfo Milani said, “I find them to be ideal gifts for my best clients.”
To encourage buying multiple copies, I offer “Maxims” at half price. You pay only $20 for the first copy, and all additional copies are $10 each. If you buy an entire box of 32 copies, you pay only $300. To order, go to www.skousenbooks.com.
Good investing, AEIOU,
Mark Skousen
Big News at FreedomFest
I’m pleased to announce that Lisa Kennedy, a Fox Business News Primetime anchor, has agreed to be our MC during the entire FreedomFest conference, July 13-16, at the Mirage Hotel & Casino. She is even planning to do her show there!
Kennedy is known for her quick wit and has been a frequent member of the popular Fox News show, “The Five.”
Other big-name speakers already confirmed include Steve Forbes, actor Ben Stein, economist Art Laffer, former congressman Justin Amash, reporter Glenn Greenwald and libertarian comedian Dave Smith (who was recently interviewed by Joe Rogan). We also have a great line-up of financial experts for our three-day investment conference at FreedomFest, including Oxford Club’s Alex Green and our own Eagle Financial investment guru Jim Woods, as well as foreign investment guru Adrian Day and coin expert Van Simmons. Plus, special guest star Jim Rogers will visit us from Singapore!
The early-bird discount ends on March 31. You pay only $399 per person, and you can bring up to three guests for only $299 each. After April 1, the registration goes up to $499, and guests will cost $399 each.
Don’t delay. Use the code EAGLE to get the early-bird discount of $399 for you, and $299 each for up to three guests. To register, go to www.freedomfest.com, or call Hayley at 1-855-850-3733, ext. 202.
You blew it!
Trudeau the Tyrant
“Never underestimate the size of a panic nor the power of a politician.” — Harry D. Schultz (“Maxims of Wall Street,” p. 113)
Canada’s Prime Minister Justin Trudeau has shown his true colors in the past month, as he cracked down on Canadian truckers who refused to cooperate with the federal mandate to be vaccinated.
The crisis in Canada would never have happened if Trudeau had respected individual choice in this personal matter. Nobody likes to be pushed, especially truckers.
What was Trudeau’s response? He took away Canadians’ rights in the name of an Emergency War Measures Act. A crackdown ensued, where his troopers arrested protestors, killed their pets, took their children away and seized their bank accounts.
But his draconian actions backfired. It started a run on the banks, and foreigners withdrew their investments from Canada. Digital currency exchanges were no longer offering secure services in Canada.
The Canadian Senate was about to rebuke the prime minister. Seeing the writing on the wall, Trudeau quickly revoked the Emergency Act.
Now, he needs to be revoked.
