posted on 23 September 2016
by Keith Fitz-Gerald, Money Morning
This Stock Could Make 420% Gains as America's Presidential Battle Rages
2016 is already forecast to be the most expensive election of our lives as America drowns in political advertising. But this profit play won't just resist the election-year chaos - it actually feeds off it. I'm projecting 420% gains for this small-cap stock once the shouting's over - and this report shows you exactly why.
It's official... the lunatics are running the asylum.
Former Fed Chair Ben Bernanke said last week that policymakers should give some serious thought to negative interest rates.
I think HE ought to think about what that means for millions of investors.
I know I am.
That's why we need to have a chat today about how you defend your money before it's too late.
Here's what you need to know.
Bernanke's Comment Shows He Still Doesn't Understand the Consequences of His Actions
Millions of investors haven't wanted to believe it...
Legions of politicians have done their best to perpetuate it...
And Wall Street hopes you'll never figure it out...
Lunatics really do run the asylum.
Most rational people change course when something is not working. They admit they're wrong and move on.
Not the Fed, and certainly not Ben Bernanke.
The former Fed chair, now a consultant to The Brookings Institution think tank, noted in a post recently that
He was including "the possibility of using negative interest rates" which aren't really so bad "if properly motivated and explained".
Translation: The Fed is out of options, is looking to politicians to fix the mess they've created, and Bernanke thinks the rest of us are too stupid to understand what he's talking about. Which is why somebody has to explain it to "us" - meaning you and me.
Thing is... we do understand, and very well at that.
Negative interest rates are bad no matter which way you cut them and no matter how you try to justify them. Negative interest rates:
Now for the really sad part.
We've seen this playbook before, albeit decades ago with different actors. We've even got the t-shirt.
Think back to September 1931. That's when Britain stunned the world by eschewing the gold standard, and in the process, caused the pound sterling to plummet more than 30%.
The severe devaluation gave Britain an exporting advantage, until a "me too" effect led other major exporters to take a hatchet to their own currencies. Of course, there's no gold standard to abandon today like there was then, which is a major reason the media, legions of academics, and Ben Bernanke himself have such a hard time envisioning another currency war, even as it happens right in front of them.
Washington thinks the U.S. dollar is a weapon when, in fact, there are huge swathes of the world that believe it's a liability. Obviously, we can't do anything about what Bernanke thinks - that's a discussion for another time.
It Pays to Be Unconventional
What matters now is how you handle the situation and how to position your money for profits.
It might seem counterintuitive, but Bernanke's comments and Yellen's next moves dictate that you buy U.S. dollars.
Conventional wisdom is that you want to sell Uncle Sam's greenbacks, but that's part of the same flawed economic modelling that got us into this mess.
There is not another currency in the world capable of absorbing the excess liquidity that would result from negative U.S. rates, so traders are going to flood into dollars. We're simply the best-looking horse in the glue factory and there's nowhere else to go.
The easiest way to do this is to purchase an exchange-traded fund (ETF) like the PowerShares DB U.S. Dollar Index Bullish Fund (NYSE Arca: UUP). If you're already investing in U.S. companies you've got this covered indirectly, so the move I'm talking about here is really gravy.
Or consider a choice like the Near-Term Tax Free Fund (MUTF: NEARX) from US Global Investors. The play here is an investment in near-term municipal bonds with relatively short maturities. It's a great "cash alternative" for investors who can withstand a smidgen more risk... in dollars.
And start nibbling into the Chinese yuan with a choice like the WisdomTree Chinese Yuan Strategy Fund (NYSE Arca: CYB), which is a nice complement to any core investment strategy. China's economy will become the world's largest much sooner than most investors are prepared to realize, and that means its currency, the yuan, will break free.
If you're skeptical like a lot of investors are about this last point, let me point out that the yuan becomes part of the IMF's Special Drawing Rights basket in less than a month. And that means it's on track to becoming the world's next reserve - a story that we've been following profitably for years.
I'll leave it to you to decide whether that's from Bernanke's madness.
Or something else entirely.
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