Stock Strategist Recommends Gold, Silver and Treasurys To Weather Recession

"We're in a recession now."

That is what one investing company CEO is saying. He sees that the Federal Reserve and the Biden Administration are ushering in an economic downturn and recommends investing in precious metals (gold, silver), U.S. Treasury bonds and stock market sectors that focus on people's needs, not wants.

He discusses the current state of the economy in an interview in MarketWatch. 

The article and interview (the first question is provided below) begins with:

The Federal Reserve keeps telling the financial markets to take its tough talk seriously. Yet many investors and even Wall Street professionals are pricing stocks as if a return to the good old days of easy money and low interest rates is just around the corner. They’re convinced that the U.S. central bank is about to end its rate hikes and then pivot — lowering rates and bringing the U.S. economy to a soft landing that ushers in a new bull market for stocks.

Keith McCullough isn’t having it. The CEO of investment service Hedgeye Risk Management expects the Fed’s restrictive actions will squeeze the U.S. economy too tightly. McCullough is keeping client portfolios geared to his view that in its zeal to curb inflation, the Fed ends up driving the economy into a recession — crushing consumer demand and the ability and flexibility of businesses to borrow, finance debt, cover expenses and meet payroll.

“Unfortunately the country is going to have to deal with that,” McCullough says.

Until the economic cycle shows signs of turning, McCullough is steering investors to precious metals, U.S. Treasury bonds and stock-market sectors that focus on what people need, rather than what they want. Think health care and utilities.

In this recent interview, which has been edited for length and clarity, McCullough outlines his current outlook for the U.S. economy and the financial markets in the second half of the year, and recommends investments you’ll want in your portfolio to weather the challenges McCullough expects investors will face.

Here's the first question and answer:

MarketWatch: When we last spoke at the end of January, you were adamant about holding secure assets including gold, silver and defensive stocks to weather a coming recession. Has your outlook changed?

McCullough: No. The recession will be deeper and potentially more protracted than even I think. What happened with SVB and the other banks is not inconsequential. The credit line of America is impaired. In a bear market these things appear quickly and then all at once. It’s why it’s really hard to see a recovery in the back half of 2023. Commercial real estate is at the core of American leverage. You have massive supply, vacancy rates skyrocketing, and $1.5 trillion in commercial real estate debt maturities is coming due.  

To read more, go here. 

Investors Seeking A Safe-haven In Gold and Silver

Above, a 2023 American Silver Eagle. Photo by Armand Vaquer.

The current spot price or silver is at $21.53 toz, according to Monex Live Silver Spot Price.

This is actually good if one is buying. Bargains can be had since dealers base their prices on the current spot price plus their markups (profit, shipping & handling). Just shop around for the better deals, they're out there.

Investors are looking for a "safe haven" in gold and silver as a hedge against inflation. Since gold's spot price (per Monex) is $1,835.00 toz, silver as an alternative is much more affordable. 

MarketWatch (a Dow Jones company) has an article on this.

They begin with:

NORWALK, Conn. - Feb. 13, 2023 - PRLog -- Precious metals are a safe-haven investment when the stock market and other investments are in a down cycle. Many financial advisors recommend holding at least 10% of your retirement portfolio in a stable and trusted investment like precious metals.

Sovereign governments around the world issue coins minted from precious metals. These coins are primarily intended for investors of silver and gold bullion.

Holding precious metals as part of your portfolio acts as a stable hedge against a recession, or worse. Historically, gold and silver have held their buying power through previous recessions and periods of high inflation.

This year is the 37th year that the American Eagle coin series has been available from the US Mint. These coins have been minted annually since 1986.

The 2023 1 oz Gold American Eagle is the premier bullion coin from the US Mint and it has been minted for 37 years.

To read more, go here. 

IMF Chief: One-Third of World Economy To Go Into Recession in 2023

It may be that 2023 could be a worse year economically than 2022.

One-third of the world economy may be going into recession, at least that's according to Kristalina Georgieva, the head of the IMF.

From MarketWatch:

This year is going to be tougher on the global economy than 2022, the International Monetary Fund’s chief, Kristalina Georgieva, has warned.

“Why? Because the three big economies, U.S., EU, China, are all slowing down simultaneously,” she said in an interview that on the CBS Sunday morning news program “Face the Nation.”

“We expect one-third of the world economy to be in recession,” she said, adding that even for countries that are not in recession, it “would feel like recession for hundreds of millions of people.”

The U.S. may end up avoiding a recession, but the situation looks more bleak in Europe, which has been hit hard by the war in Ukraine, she said. “Half of the European Union will be in recession,” Georgieva added.

To read more, go here. 

One may ask, What Happens to Precious Metals During a Recession?

According to the United States Gold Bureau:

There have been some serious economic disasters in the past decade and a half. 2008 saw the subprime mortgage crisis, where predatory lending resulted in mass foreclosures with ramifications across broader markets. 

2020 brought the COVID Crash. Economies around the world ground to a halt. People were laid off or started working from home. The stock market quickly fell 34% but managed to recover quickly. Massive amounts of money were printed, leading to serious inflation.

During these economic downturns, savvy investors were able to use the precious metals market to either protect their money or even turn a profit.

Is Investing in Gold During a Recession a Good Idea?

The short answer is yes. Gold typically moves inversely to the value of the dollar and also the stock market. If the dollar is strong, gold prices tend to dip. Commodities like gold are also the first to start rebounding during an economic downturn. 

Is Silver a Better Investment Than Gold During a Recession?

As mentioned above, gold will initially be pulled down with everything else during a recession. But it will be one of the first things to bounce back and increase in value throughout the recession.

Silver, on the other hand, doesn’t have the same track record. Silver rarely increases in value during market selloffs. This might be due to silver having a higher industrial usage than gold. During a recession, industrial production slows down. As a result, the demand for silver decreases. 

While silver does have a low correlation to stocks, it is thinly traded and volatile. It’s certainly not a bad investment, but in the context of precious metals to invest in during a recession, silver loses out to gold.

To read more, go here. 

Unfortunately, gold is too expensive (currently around $1,834 an ounce) for the average person to buy. At least silver is affordable (currently around $24.23 an ounce) for the average person.

From Yahoo! Finance:

When it comes to alternative currencies, gold is usually the tender of choice. David Morgan, publisher of The Morgan Report and creator of Silver-Investor.com, disagrees. Morgan says that when it comes to precious metals as legal tender, silver is the best bet.

Silver is less expensive than gold, which makes it easier to transport and use. “In an absolute crisis, silver would be would be the monetary metal of choice. Its value per unit is a lot less than gold,” Morgan says.

The lustrous metal has been synonymous with money throughout history. “Silver has been used as money in more places and more times than gold ever has,” Morgan tells The Daily Ticker.

To read more, go here. 

Gold and Silver Higher As China Lifts COVID Restrictions

Above, 1964 JFK half dollars containing 90% silver. Photo by Armand Vaquer.

For those of us holding gold and silver (along with other precious metals) saw today that China's lifting of COVID restrictions gave precious metals futures a boost in value.

From MSN:

METALS STOCKS

Gold and silver futures settled sharply higher on Tuesday as the U.S. dollar slipped. Copper also jumped on hopes that China lifting COVID-19 restrictions to reopen its economy will boost demand of industrial metals and support the country’s real-estate sector.

Price action

• Gold for February delivery rose $18.90, or 1.1%, to settle at $1,823.10 per ounce on Comex. It had traded as high as $1,841.90 in early dealings, the highest intraday level for a most-active contract since June 27, according to FactSet data.
• March silver rose 30 cents, or 1.2%, to end at $24.22 per ounce. 

To read more, go here. 

Score One For Ukraine...Maybe

Above, the missile cruiser Moskva before its sinking.

If what the Ukrainians are saying is true, the sinking of the Russian missile cruiser Moskva in the Black Sea by a missile is a major win for Ukraine. It symbolizes that Putin's invasion/war against Ukraine is coming at a high price.

According to MarketWatch:

KYIV, Ukraine — The flagship of Russia’s Black Sea fleet, a guided-missile cruiser that became a potent target of Ukrainian defiance in the opening days of the war, sank Thursday after it was heavily damaged in the latest setback for Moscow’s invasion.

Ukrainian officials said their forces hit the vessel with missiles, while Russia acknowledged a fire aboard the Moskva but no attack. U.S. and other Western officials could not confirm what caused the blaze.

The loss of the warship named for the Russian capital is a devastating symbolic defeat for Moscow as its troops regroup for a renewed offensive in eastern Ukraine after retreating from much of the north, including the capital, Kyiv.

In his nightly video address to the nation, President Volodymyr Zelenskyy alluded to the sinking as he told Ukrainians they should be proud of having survived 50 days under attack when the Russians “gave us a maximum of five.”

To read more, go here. 

I Stand With In-N-Out Burger

There are two hamburger restaurant chains that are my favorites and will not hesitate to patronize each. One is Original Tommy's (famous for their chili burgers) and In-N-Out Burger.

In-N-Out Burger has reinforced my esteem by refusing to capitulate to a tyrannical government in becoming a "vaccination police" company.

From MarketWatch:

An In-N-Out restaurant in San Francisco was briefly shut down by the health department for not enforcing the city’s vaccine mandate, causing the burger chain to retort: “We refuse to become the vaccination police.”

The In-N-Out Burger at San Francisco’s Fisherman’s Wharf — the chain’s only location in the city — was shut Oct. 14, KRON-TV first reported Tuesday. It has since reopened, but without indoor dining. San Francisco has one of the toughest vaccine mandates in the country, requiring proof of vaccination for indoor dining, which went into effect Aug. 20.

In-N-Out said it posted signs at the restaurant stating the vaccine requirement, but its employees were not enforcing compliance.

Remember, a mandate is not the law of the land and I totally stand with In-N-Out Burger.

To read more, go here. 

MarketWatch: Renting RVs and Doing It Right

Above, an RV rental lot in the San Fernando Valley. Photo by Armand Vaquer.

Since it appears that RVing will be as hot or even hotter than last year, many will try out renting one for thier summer vacation trip.

MarketWatch has an article on how to rent an RV and doing so right.

They begin with:

RVing was hot in 2020 — popular RV rental company  Outdoorsy saw a 4,500% increase in bookings in 2020, for example. And in 2021, it may just be again: A recent survey by the RV Industry Association found that about three in 10 Americans hope to take an RV trip this year — 10% of whom have never done it before.

The appeal of RVing is obvious. You get the creature comforts of home, including a comfy bed and mini-kitchen, while out in nature. And there are plenty of RV rental options, including Outdoorsy and RVShare. Here’s what to know before you go.

To read further, go here. 

UFO Report Does Not Confirm, Nor Rule Out, Alien Spacecraft

Above, alien display at the Roswell International UFO Museum. Photo by Armand Vaquer.

A government report on Unidentified Flying Objects (UFO) is set to be released to congress later this month.

Essentially, it says there's no evidence that they're alien spacecraft. But, it doesn't rule it out either.

According to MarketWatch:

A highly anticipated government intelligence report on unidentified flying objects finds no evidence of alien spacecraft — but it also doesn’t say it’s not aliens, according to a new report.

Scores of odd aerial sighting in recent years that have baffled scientists and the military remain a mystery, according to a New York Times report Thursday night.

Citing senior government officials who have been briefed on the largely inconclusive finding of the report, which will be presented to Congress later this month, the Times also reported top-secret U.S. technologies have been all but ruled out in most of the incidents, leaving a major question hanging: So if they weren’t ours, what were they?

The report investigated more than 120 incidents over the past two decades, many from U.S. military pilots, with unusual sightings captured on video and sensors. A number of sightings described craft that flew with no discernible propulsion system, flying at speeds and making maneuvers that seem to defy physics.

Above, a replica of Gort from The Day The Earth Stood Still at the
 Roswell International UFO Museum. Photo by Armand Vaquer.

Since alien spacecraft haven't been ruled out, all we can do is...Keep Watching The Skies!

To read more, go here. 

State-By-State Cost To Retire

Above, yours truly in New Mexico. No regrets! Photo by Nandoh Munoz.

How much money would you need to retire?

MarketWatch has an article on how much money it will cost for retirees to retire in each state.

California and Hawaii are the worst. New Mexico, where I live, is the sixth least expensive state. 

According to MarketWatch:

We’re in a state of low savings. 

Depending on what state you choose to retire in, you could need anywhere from $666,000 to upward of $2 million saved. And that’s outside of what you get from your Social Security checks. 

Those figures are according to an analysis released Thursday by personal finance site GoBankingRates, which estimated how much money you’ll need to save to retire in every state in America. To determine this, the site looked at the estimated average annual expenditures of a typical retired person in each state and then subtracted that from the average annual Social Security check. It assumed retirees would be drawing down savings by 4% each year and the money would last 26 years. 

The cheapest state to retire in, according to their calculations, was Mississippi, where you’ll need about $667,000 to retire. That’s thanks, in part, to low housing and transportation costs. That’s followed by Oklahoma and Arkansas.

To read more, go here. 

Poop Piling Up In National Parks

Above, Yosemite's Bridal Veil Fall. Photo by Armand Vaquer.

The partial govenment shutdown is causing a maintenance nightmare in our national parks. 

MarketWatch reported:

WASHINGTON (AP) — Human feces, overflowing garbage, illegal off-roading and other damaging behavior in fragile areas were beginning to overwhelm some of the West’s iconic national parks, as a partial government shutdown left the areas open to visitors but with little staff on duty. 

“It’s a free-for-all,” Dakota Snider, 24, who lives and works in Yosemite Valley, said by telephone Monday, as Yosemite National Park officials announced closings of some minimally supervised campgrounds and public areas within the park that are overwhelmed. 

“It’s so heartbreaking. There is more trash and human waste and disregard for the rules than I’ve seen in my four years living here,” Snider said.

To read more, go here. 

Baby Boomer Divorce Leading To Financial Woes

Above, the Little Church of the West in Las Vegas, the oldest building on the Las Vegas Strip. Wikipedia photo.

After looking at an article that MarketWatch posted about the steep rise in baby boomer divorces, I guess I am lucky (all things considered).

My ex-wife and I split up 24 years ago and finally finalized our divorce three years ago. It is my understanding that she has remarried (she didn't exactly invite me to the wedding), so she's someone else's problem.

It is interesting to read about late-in-life or "gray" divorces.

According to MarketWatch:

Looking ahead to the next phase of life can seem pretty dreadful if you can’t stand the person who you’ll be spending it with. 

That may be what some boomers are facing. Among U.S. adults ages 50 and older, the divorce rate has roughly doubled since the 1990s, according to a recent Pew Research Center report. 

Statistically speaking we’re healthier and probably going to be living a lot longer — possibly 30 years longer — than average retirees once did. The surge in late-in-life — or “gray” — divorce is one possibly unintended consequence of this so-called longevity bonus.

Since I am financially secure and am in good health (knock on wood), I feel rather fortunate. It is funny to remember years ago that while at a friend's house we heard a wedding caravan of cars pass by. To that, he said, "Why buy a cow when milk is so cheap?" Based on the statistics, maybe there's some truth to that.

To read more, go here.

Fiat's Godzilla Commercial Debuts

Above, a scene from the movie. Photo: Legendary Pictures and Warner Bros.

The new Godzilla Fiat commercial, "Godzilla Craves Italian" has been floating around on the Internet for the past few days. For some reason, the video would not open when I tried to view it.

However, this morning the commercial came on television when Jes and I were about to leave the house. We stopped and watched it. It was well done (Godzilla is nicely rendered in CGI) and the ad itself is humorous.

Here it is:



Marketwatch.com has this to say about the commercial:

Leading up to the May 16, 2014, release of Warner Bros. Pictures' and Legendary Pictures' hugely anticipated epic action adventure "Godzilla," FIAT Brand North America launches a new commercial across television on Monday, May 5. The 30-second spot features Godzilla rampaging through an American city, targeting anyone driving a FIAT vehicle. The visual effects were created by the Canadian visual effects house Moving Picture Company (MPC), the team responsible for bringing Godzilla to life in the film, who achieve the same level of cinematic finish and dramatic impact in the spot. The commercial begins airing across television today (5/ 5), with a special extended "Director's Cut" available for viewing at FIATUSA.com . 

 To read more, go here.

Dollar Buys Less Than 79 Yen

Japan's tourism industry is still trying to recover from the effects of the March 11 earthquake and tsunami. Today's news on the further slippage of the U.S. dollar against the Japanese yen does not help matters any since we are now in vacation season.

Marketwatch.com is reporting:

SAN FRANCISCO (MarketWatch) - The yen rallied against the U.S. dollar early Wednesday in Asia, with the greenback hitting a low of ¥78.49. At last check, it traded at ¥79.06, down from ¥79.40 in late North American trading Tuesday and below late Monday's ¥80.28.

This means that for every dollar exchanged for Japanese yen, the dollar buys only ¥79 or less. Four years ago, I was able to buy ¥116 for every dollar I exchanged.

This does not bode well for travelers to Japan as their dollars buy fewer yen, thereby making a trip to Japan more expensive. It also makes Japanese goods more expensive. It also does not help Japanese exporters as it makes their goods more expensive in America.

Right now, the current rate* of exchange between the dollar and yen is:

1.00 USD = 79.4261 JPY

*Source: Universal Currency Converter

To see Marketwatch's article, go here.

Dollar Hits New 15-Year Low Against Japanese Yen

The dollar has hit a new 15-year low against the Japanese yen, according to MarketWatch.com:

NEW YORK (MarketWatch) — The U.S. dollar tumbled across the board Monday, pushing the greenback to a fresh 15-year low against the Japanese yen, as the outcome of the meeting of finance ministers and central bankers from the Group of 20 nations gave traders no reason to stop selling the U.S. currency.

Against the Japanese yen, the dollar /quotes/comstock/21o!x:susdjpy (USDYEN 80.8200, -0.6100, -0.7491%) bought ¥80.75, down from ¥81.43 late Friday.

It fell as low as ¥80.39, according to FactSet Research, not far off the historical record low of ¥79.75, hit on April 19, 1995.

This does not bode well for potential tourists to Japan or for Japanese exporters.

To read the full MarketWatch article, go here.