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Trade Wars, Gold and a Once-in-a-Lifetime Opportunity
SP: There is a chart that we've been discussing over the last year or so. Jeff Gundlach from DoubleLine Capital LP included this chart in his 2017 year-end review, suggesting that we're near the beginning of a new cycle, and resources are one of the sectors of the market that should perform best going forward. The chart shows the S&P Commodities index, divided by the S&P 500 Index. The chart measures how many units of resources you can buy with a unit of the S&P 500. This chart has never been at a lower level than where it's sitting right now, suggesting we may see a major mean reversion where the S&P Commodities Index outperforms the S&P 500 Index for a number of years.
The last time the ratio was at these levels was in the dot-com bubble. Remember, there was a lot of exuberance in the markets; lots of growth expectation and technology was leading the markets. Resources was not a sector that people were allocating to. And that was the genesis of the later industrialization of China. It was a great catalyst. And from then, the S&P Commodities Index outperformed the S&P 500 Index by a factor of about 4:1 over the next decade.
This chart shows that we're in a similar predicament right now. If we go back to what happened two decades ago, there's going to be an opportunity where resources have the potential to outperform the overall broader market, as measured by the S&P 500, by multiples. Last time, it was 4:1 over a decade. I'm not sure what it could be this time, but if mean reversion does take place, I find this chart a very compelling reason for allocating to resources.
Worse than the theft and corruption in regard to BTC and other crypto's is the corruption of central banks and their counterparts (agents) in the worlds governments spending up a storm and creating astronomical debts.
They can create money out of thin air, that is the heart of the corruption. Money should be limited and nobody should have control of its value, nor be able to create unlimited amounts of it at will.