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The Daily Reckoning - Financial market news that Australian investors need to know


A quick heads-up. I got a call from the printers late last night. They’re starting to run low on copies of Jim’s book, The New Case for Gold, which means this great offer will likely end soon.

If you want a copy, along with the bonus Aussie Chapter…

Please confirm your mailing address here today.

Or read on below…


From: The Daily Reckoning Australia <dr@dailyreckoning.com.au>
Sent: Saturday, February 09, 2019 8:03 AM
To: James Woodburn <james.woodburn@agorafinancial.com.au>
Subject: <Pending delivery status> Please confirm your address



Here’s why you need to
listen to me about gold...


2018 was a rotten year for investors.

The FTSE All-World index, which tracks thousands of stocks around the world, plummeted 12% last year. That makes 2018 the worst year for stock investors in TEN years… since the global financial crisis, to be exact.

Australia normally escapes the worst of these events, but this time we took a beating too.

The ASX 200 had an absolutely shocking end to the year.

October was especially horrific. The index nosedived…$120 billion was wiped from investors’ accounts.

All up, last year was our market’s worst since 2011.

So, is this it for stocks?

Is it time to get out? Or is it too soon to sell?

Is this a sign of worse to come? Or just a big fuss about nothing?

Well, let me tell you: I believe there IS a big threat on the horizon.

To me this looks like the early warning signs of a major downturn. And I think the very worst thing you could do is be complacent about it.

I know that sounds scary…but it’s actually good…

You see, it means you have a little time now to reevaluate your investment strategy heading into 2019 — and to take action…by pivoting into what history tells us is often the safest asset class of all in times of market uncertainty…

Obviously, I’m talking about GOLD.

Some people dismiss gold. They shouldn’t.

Gold could help you preserve a large portion of your wealth if the stock market does take a big hit.

But not only that. The gold market is RISING at the time of recording this. Gold in US dollars is up 10% since I called the market bottom on 28 September last year.

By comparison, the ASX 200 is DOWN by 10% over the same period.

That’s tells you something extremely important…and timely.

It’s tells you that gold is fulfilling its traditional role as a hedge against falling stock prices.

And it further underlines my belief that EVERYONE should have a portion of their wealth invested in gold right now…in case the situation deteriorates. 

And here’s the thing.

It doesn’t really matter what type of gold you buy at this point…

Physical gold has a chance of further rises as more investors flee the equity markets looking for a safer place for their cash.

Also, with the Aussie dollar falling against the US greenback, the price of physical gold in our currency tends to go up — providing the US dollar gold price remains mostly stable, or rises.

That’s also good news for Aussie gold miners, who can command a greater margin on their product — which makes gold more attractive to pull out of the ground.

And if they’re suddenly more profitable, it can give their share price a boost too — which is great news for investors.

This is why I’m so bullish about gold right now.

And why I’m so determined to put my case to every Australian investor.

Please, stick with me for the next few minutes and let me share my reasoning with you. With the markets looking this risky, I’m pretty sure this could be the most valuable use of your time today.

I’ll show you why I believe you need to invest in gold right now.

I’ll show you where I think you can get the most bang for your buck in the gold market — and the type of gold investment you should definitely stay away from.

I’ll even send you a book — straight to your door — that sets out the most important case for investing in gold in Australia today.

All you need to do is keep reading.

Look, if you’ve spent a lot of time investing your money in stocks…if you’ve always tried to make the right decisions…if you’re concerned about the future…

…you need to pay attention to what the market is telling you — and be prepared to act.

A few minutes out of your day right now is not a lot to ask…but you could learn something incredibly valuable…something that could not only save you money…and avoid heartache in the event of a major stock market crash…but could actually make you noticeably wealthier...if gold continues to rise, as I’m confident it will.

This is why I’d like to send you a copy of a brand-new book called The New Case for Gold. In fact, I’d like to post it out to you right away.

I’m not talking about an ‘eBook’.

This is an actual, physical book – with a hard cover

It’s on hold, here in our office, waiting to be posted to you.

If you want it, I need to know now.

There are just 5,000 copies of Jim’s The New Case for Gold reserved for eligible Daily Reckoning readers...and there are more than 50,000 of you.

There is a cost.

But as I’ll explain, I’ve found a way to absorb all of it.

The only thing you need to cover upfront is the $9.22 cost of packing and shipping.

That’s it.

But before we get to the details of that...

Why do you even need this book?

In short, I believe we are on the verge of a crisis unlike anything you’ve seen in your lifetime.

I’m not just talking about a recession (although that’s a very real looming risk, as you’re about to see).

In fact, I’m talking about the biggest monetary ‘reset’ the world has seen in 150 years.

Central banks and governments across the world have manipulated the markets…printed money…and suppressed interest rates to such a level…

I believe a worldwide economic collapse is now inevitable.

If I’m right, it will be the biggest of its kind in modern economic history.

It could be bigger than 2008…

It could cause the hardest one-day drop in global markets since October 1987…

And create the longest total asset price fall since 1929.

Now, I fully realise this might sound hyperbolic.

But let me stress…

When I talk about an international monetary system collapse, I’m not being hyperbolic or provocative.

Over the past century, monetary collapses have actually been a regular occurrence.

In each instance, it forced the major financial and trading powers of the time to sit down around a table…and rewrite the ‘rules of the game’.

Think about it…

It happened in 1922 in Genoa, Italy…where, after the First World War, the world returned to a partial gold standard.
It happened again in 1944 at Bretton Woods, New Hampshire…where the gold-backed US dollar became the de facto world reserve currency…
And it happened yet again in 1971 with the ‘Smithsonian Agreement’ in Washington, DC…where fixed exchange rates were forever altered…the US dollar became the king currency…and the current ‘age of inflation’ began.

Fact is, these ‘rule changes’ happen every 30 years or so.

They’ve been happening since historical records began.

We’re well past due for another one.

I believe it’s coming…

And Australia, and most of its citizens — including you — are woefully unprepared

When it comes to gold — gold in the ground and gold mining — there’s no question Australia is a superpower.

In terms of our gold reserves, we’re sitting on a literal gold mine.

In terms of gold mining output, we’re in the ‘Big 10’ and have been for years.

But we face TWO problems…

First, there’s a big difference between gold in the ground and ‘official’ gold.

When it comes to official gold holdings, the RBA’s coffers are actually pathetically small relative to the size of the Australian economy.

Take a look.

Australia is behind Libya, Greece and Iraq in gold reserves

Source: World Gold Council, October 2018

Because our economy is significantly smaller than, say, China or the United States — our government reckons it doesn’t need as much OFFICIAL gold.

But as you’ll see in The New Case for Gold…

This shortfall is about to become a big problem for every Australian

As a country, we have dangerously little gold relative to the size of our economy, which is significant.

And there’s this disparity between private gold and gold mining on one hand…and ‘official gold’ on the other.

The problem is acute: Official gold is what counts when it comes to the international monetary system.

If there is a collapse in the international monetary system, which I fully expect there to be…the countries with the largest gold reserves will have the most bargaining chips.

And countries with small gold reserves will be extremely vulnerable to their power.

That puts our country at risk.

You’ll see why in The New Case for Gold.

But there’s a second, more immediate, reason I’ve arranged such a big subsidy of Jim’s book in Australia.

(I can tell you now that the $9.22 fee means we will not make a cent on it. In fact, it will cost $20.72 to print and ship every copy. So, my publisher, Agora Financial Australia, will actually LOSE $11.50 with each copy shipped.)

We’re swallowing this cost because we truly believe it’s time to do something about the low level of private gold ownership in Australia.

You see, I know that most of you still have not bought any gold…

Or haven’t bought enough.

Worse yet, many people have bought exactly the wrong kind of gold.

In fact, many are abandoning gold as an asset in favour of the strengthening US dollar…or even cryptocurrencies like Bitcoin or Ethereum.

But I promise you: This is a monumental mistake.

And there’s a very important reason for me saying that.

Please listen VERY carefully…

My analysis tells me the Australian economy faces a grim future in the face of this global ‘monetary reset’.

Our lack of official gold reserves is but one part.

The other is a disabling overreliance on one key trading partner.

I’m talking about CHINA.

And it’s why I believe you need to start preparing yourself for this reset, and the imminent recession in its wake.

Not next week...

Not tomorrow…

But right now.

You see, if you’re 27 years old or younger, you’ve never experienced a recession in your lifetime.

If you’re under the age of 40, you’ve never experienced a recession in your adult lifetime.

Australia’s last recession ended in June 1991, nearly 28 years ago.

And you can attribute this great run to two things…

An abundance of natural resources, and…
Our physical distance from the problems of the world.

Think about it…

We enjoy a moderate climate…a relatively small population in the world’s sixth-largest country by land mass…we have a liberal immigration policy…the English language…and a good rule of law.

All these have combined to make us one of the most prosperous countries and sought-after destinations in the world.

This is why we’re called ‘the Lucky Country’.

The economic data backs this up, too...

Housing data, for example, is a proxy for wealth creation and general prosperity.

Take a look at this graph…

It shows Australian population growth…and the increase in house prices since our last recession in the early 90s.

Why Australian house prices have risen — and ultimately, why they are now falling

Source: Bloomberg

Two features stand out in this graph.

The increase in population has been material — up 35% overall with only a few dips along the way…
The increase in house prices has been CONTINUOUS with NO material dips…up $500,000 per home, on average.

Can you see how a rising population and rising home prices go hand-in-hand?

Yet, in the past five years, this analysis has taken on a new and more vulnerable cast…

The population increase has not been driven by increased birth rates among the existing residents…

But by immigration, mostly from Asia, with a large influx of Chinese in particular.

Now, this is important to understand.

Because this single fact alone contributes to the record-setting recession-free stretch.

Now ask yourself this question…

What happens when the inflow of Chinese migrants and
capital dries up?

Australia’s natural resource exports drive our trade surpluses and GDP.

But these exports are heavily reliant on China importing them.

Aussie coal for China’s power plants…

Aussie iron ore for China’s steel mills…

And Aussie gold for China’s reserve position.

The trouble is…

China IS slowing down…and Chinese purchases of Australian exports are slowing with it.

What’s more, China has tightened its rules on how many people can leave the country…and how much of their MONEY can leave the country.

What’s likely to come next?

A looming Australian recession


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