The best edge investors can give themselves

Thursday, 14 December 2017
Melbourne, Australia
By Bernd Struben

  • A remarkable deal
  • The first-mover advantage

If you subscribe to Vern Gowdie’s The Gowdie Letter, or Gowdie Family Wealth, you likely keep a keen eye on interest rates.

Vern, as you may know, recommends steering clear of the stock markets. Not to mention cryptos. That is until after the imminent — or as he says monumental — market crash. A crash he’s convinced is just over the horizon.

That’s because every one of Vern’s micro- and macro-economic indicators are flashing red. Danger. Crash ahead.

For that reason, Vern recommends keeping almost all your wealth in cash. And resisting the urge to buy even a single satoshi. (In case you’re not up on your cryptos, that’s one-hundred-millionth of a bitcoin.)

With most term deposits paying a measly 2.5%, your cash pile won’t grow quickly. Though that does outpace Australia’s inflation rate of 1.8%.

But the point of holding cash isn’t to score double-digit gains. It’s to protect your wealth. So when asset prices come tumbling down, you’ll be in a position to scoop up the bargains.

And, as you can see in the graph below, a lot of people are heeding Vern’s advice.



chart image

Source: Reserve Bank of Australia
Click to enlarge


In fact, Australian cash in circulation is at a 50-year high.

From The Australian Financial Review:

Reserve Bank governor Philip Lowe told the 2017 Australian Payment Summit on Wednesday despite many people switching to electronic payments such as card payments, the value of banknotes on issue is at a 50-year high as a share of Australia’s GDP at around 4 per cent of nominal GDP.

“Australians are clearly holding banknotes for purposes other than making day-to-day payments,” he said…

“It could also be a precautionary motive. During the global financial crisis, for example, the demand for cash increased. In periods of volatility or geopolitical uncertainty there may be a precautionary motive for people wanting to hold cash.”

He said some may decide to hold cash rather than depositing money in the bank because banks currently offer low interest rates.

“In a relatively low inflation/low interest rate environment, the opportunity cost for holding cash is also low…”

The governor’s comment comes as the Reserve Bank is releasing 200 million new $10 bank notes to meet the public’s ongoing appetite for cash as a store of wealth.’

So much for the death of cash.

More after the markets.

Markets

Overnight, the Dow Jones Industrial Average closed up 80.63 points, or 0.33%.

The S&P 500 fell 1.26 points, or 0.05%.

In Europe, the Euro Stoxx 50 index finished down 18.60 points, or 0.52%. Meanwhile, the FTSE 100 lost 0.05%, and Germany’s DAX fell 57.89 points, or 0.44%.

In Asian markets, Japan’s Nikkei 225 index is down 48.88 points, or 0.21%. And China’s CSI 300 is down 0.35%.

In Australia, the S&P/ASX 200 is down 4.33 points, or 0.07%.

On the commodities markets, West Texas Intermediate crude oil is US$56.80 per barrel. Brent crude is US$62.44 per barrel.

Gold is trading for US$1,254.10 (AU$1,643.64) per troy ounce. Silver is US$16.05 (AU$21.04) per troy ounce.

One bitcoin is worth US$16,427.52.

The Aussie dollar is worth 76.30 US cents.

A remarkable deal

If you do follow along with interest rates, you’ll know that overnight the US Fed nudged rates up 0.25%.

That brings the US cash rate up to parity with Australia’s, at 1.50%.

The move was widely expected. And it will be the last under the watch of Chairwoman Janet Yellen.

Counter to what some pundits predicted, the Aussie dollar gained 1.1%. It’s currently worth 76.30 US cents. That’s largely because speculators now see a slower rate rise path from the Fed in 2018, partly due to lower than expected inflation.

After sitting on their hands this month, the RBA’s next move is anyone’s guess.

Shae Russell, editor of Currency Wars Trader, believes the RBA won’t raise rates in 2018 at all. In fact, she told me yesterday that she expects the central bank to cut rates.

Selva Freigedo, the analyst for Port Phillip Insider Extra, joined the conversation. She’s convinced the RBA will raise rates to keep from falling too far behind the US Fed. Not to mention some likely rate rises from the European Central Bank could be on the cards.

Matt Hibbard, editor of Total Income and Options Trader, was in the Albert Park office yesterday as well.

Matt plans to have his subscribers well prepared regardless of the direction interest rates take.

Over at Total Income, he does that by hunting down the best dividend paying stocks on the ASX. Ones that not only pay out regular income to shareholders, but often see their share prices climb as they’re doing so.

And if you subscribe to his premium service, Options Trader, you’ll know you don’t even need to own stocks to squeeze extra cash from the market. It’s not through a dividend…advance on earnings…or anything like that either.

Now, I know that a lot of people are leery of options. They think they’re too difficult. Or risky.

But Matt walks you through his professional options strategy — one the wealthy have used for decades — step by step. And he shows how options can actually be used to reduce your risks even as you pocket extra income in a rising or falling market.

If you’re an Alliance Partner, you’ll know all this already. At least if you’ve been keeping up with your reading!

That’s because the six advisory services mentioned above — The Gowdie Letter,Gowdie Family Wealth, Currency Wars Trader, Port Phillip Insider Extra, Total Income, and Options Trader — are all part of the lifetime Alliance Partner program.

And there are 13 other services…and counting. That’s far too many to cover in today’s Port Phillip Insider.

But as I wrote yesterday, we’re briefly accepting new Alliance Partners.

It’s a remarkable deal. One that will see you receive every Port Phillip Publishing investment advisory service (bar two), plus every new one we ever come out with…for the rest of your life.

The doors remain open until midnight next Monday. If you haven’t checked out the full offer yet, you can do so here.

The first-mover advantage

Before signing off today, there is one more newsletter I wanted to bring to your attention. Another brand new premium service we just launched this year.

And that’s Greg Canavan’s IPO Investor.

It’s a unique service. And one Greg spent more than a year preparing. Via his network of brokers, Greg’s been able to get his subscribers into a number of highly regarded IPOs.

The vast majority of Aussie retail investors never have a chance of getting into a top-notch initial public offering (IPO). Their first chance to invest doesn’t come until after the stock lists on the ASX.

And once a stock lists, it can often spike right on the opening bell.

Like engage:BDR. The company just listed on the ASX today…at a 25% premium to its IPO price. And Greg managed to secure priority shares in the IPO for his subscribers.

Another company Greg was able to get his subscribers IPO access to is Okapi Resources. How did that one go?

Here’s what Greg wrote on 5 October:

Okapi Resources Ltd [ASX:OKR] listed on the ASX. It immediately traded at a premium, finishing the day at 33.5% — a nice 67.5% premium to the IPO price that you got in at.’

A 67.5% premium on opening day. Nice indeed. And at time of writing Okapi is up more than 120% above the IPO price Greg’s readers paid.

Greg Canavan’s IPO Investor is one of the 19 advisory services you’ll receive as an Alliance Partner.

IPO Investor is not currently accepting new subscribers…outside of Alliance Partners. When it does briefly open back up next year, new subscribers will pay $4,999 for one year of access to the service’s exclusive, first-mover opportunities.

Alliance Partners will have that first-mover opportunity for life. Get the full scoop here.

Oh and one more thing…

In today’s Australian Tribune — ‘Australia’s Immigration Policies Attracting Global Praise’:

The left-wing media loves to trash Australia’s immigration policies.

According to some, the policies are far too restrictive. Australia, they’ll tell you in one enthusiastic breath, was built on immigration. And, in an ironically gloomy second breath, they’ll go right on to lament what they like to call ‘Invasion Day’.

What they also ignore is the inconvenient fact that in today’s world tens of millions of people would eagerly immigrate to Australia under an open door policy.

Now Australia’s immigration procedures are gaining global attention for the very fact that they are successful…

The Australian Tribune is Port Phillip Publishing’s new, politically-oriented newsletter and website.

If you’re fed up with reading sanitised, politically-correct dogma cut and pasted from one mainstream source to another, The Australian Tribune is for you.

And it’s absolutely free.

Sign up here to get The Australian Tribune delivered free to your inbox five days per week.

Or visit our website here to read the complete article above and all the latest, uncensored political news from around the world.

Cheers,
Bernd