“It’s time to hunker down,” they tell their spouses. “We have to hold onto what we have and not do anything risky.”
That’s no way to think during a once of a lifetime opportunity like this. And, frankly, it’s no way to live.
It’s a little known fact: Recessions actually create much better opportunities than economic booms for creating serious wealth.
How is that possible?
Grow wealthy in a recession
The key is knowing what goes up during a recession, specifically a global recession.
And there are two things that go up:
The value of the US Dollar and the value of Ten-Year Government Bonds (T-notes). Just about everything else goes down.
And because only a few things go up – these upward moves get exaggerated because there are so few other alternatives.
There really is no where else to hide.
Stocks? Down. Most commodities? Down. Real estate? Down. Jobs? Down.
And yet, to put your money under the mattress is to follow the crowd – and the crowd is always wrong. And if they aren’t wrong, they are just average.
Who wants to be average?
During the boom times, no one is really thinking. They just do what everyone else is doing.
Buy some stocks. Pick up a rental property or two. Get convinced to sell some Amway to their neighbors. The rising tide lifts all ships and because of that, people think they are doing well.
“Look Martha,” they tell their wife, “I’m doing pretty good. The portfolio is up!”
In fact, they are just doing . . . average.
There is that word again!
They are doing the same damn thing that everyone else is doing.
They are just a life raft floating on top of the economic ocean, moving back and forth at its whim.
And when the recession comes along, as it always does, they follow the heard mentality yet again. They panic, sell out at the dead lows, and then hunker down to wallow in their misery.
“Why me?” they wonder…“When this thing turns around, I’ll make it all back.”
When it turns around?
Two ways to make money
There are two easy way to participate in the rising tide of the global recession.
The Exchange Trade Funds UUP (US Dollar Index) and TLT (Bond Market) will both rise into the first quarter of 2012.
The signals on the weekly and monthly charts all confirm this, and this is what has happened in past global recessions as well. (Although nobody pays attention, history truly does repeat itself . . . over and over and over again).
But what about gold and silver? Isn’t the US Dollar dead?
In the long term, yes. The dollar is in trouble and gold and silver will continue to be great long term investments.
But for the next 6 months? Strength in the US Dollar is going to push down prices of gold and silver.
In fact, as we head into 2012, one of the things I’ll be talking about is the last great entry price for buying gold and silver—more on that in early 2012.
For now, right in front of us, we have an entirely different set of issues…
During a global recession, all fiat currencies get hit in order of GDP (Gross Domestic Product). The economies with the largest GDP will have the strongest currencies. And the economies with the most liquid debt markets benefit from the flight to safe havens.
Both of these facts will push up both the US Dollar (UUP) and US Government Bonds (TLT) into Q1 2012. Believe me, no one is clamoring to buy bonds from Greece.
My strategy with this is to buy these at current levels, with stop losses 20% below current prices. UUP is selling for $21.00, while TLT is selling for $110.00. My plan is to hold these into March 2012, at which point I’ll trail up my stop to 8% below wherever they are trading at. From that point on I will trail that 8% stop until it is hit.
At some point, the worst of the global recession will pass, and at that point the bond market will recognize this fact and start to retreat. In fact, there is no need to wait with baited breath each month for the key economic data to be unveiled. The bond market already knows all this information well in advance and it is continually pricing it in. Bonds are going up now to extraordinary levels.
Guess what? There is no need to speculate how the October jobs report is going to be. It’s going to be bad. The bond market is telling us this way in advance.
The signs are there. They are all over the place. You just have to know where to look. And no, it’s not going to be in the newspaper and your neighbor doesn’t know anything about it either.
It’s the bond market. That’s the key. The bond market truly is a crystal ball and it’s giving us a clear road map into March 2012.
If you want to hunker down and hold onto what you have, that’s perfectly fine. But if instead of drifting on the ocean of economic fluctuation, why not just borrow an oar and steer yourself to where you want to go?
John Frederick Carter