Keeping the Party Going

 29  August  2020

Dear Fellow Investor,

Keeping the Party Going

Last night the US Federal Reserve made a policy shift which will maintain their 2 % inflation target but leave open the possibility of higher inflation targets . Chairman Powell did not give a clear time frame but indicated negative real interest rates would continue. Negative real interest rates means that inflation now measured by the CPI   is more than the 10 year US treasury bond.  Inflation is now 1.8 % while the US 10 year T bond is 0.75 % which equates to a negative real rate of 1.05 %

That means equities  are the only game in town.    This policy shift  will boost equities world wide.      

 For us as investors it means equities are the only game in town.

To support equities year on year money supply growth in the US for July 2020 rose 36.9 %  . This is an all time high which include unprecedented QE, stimulus packages and central bank asset purchases.  Much of this money will find its way into equity opportunities world wide including Asia. China as almost all central banks in the world are following Chairman Powell’s easy money lead.  

For those of you who I manage money for, my focus is on safety and capital preservation.  Buying and holding value shares in well managed businesses which pay dividends and have low debt is my method. Chasing the high flying shares in crowded spaces is not my style. Having at least a 10 % allocation in precious metals/ gold mining companies will hedge against the disastrous irresponsible fiat money policies of the central bankers.  

Tomorrow, Saturday, will hold a Zoom presentation at 11 AM and the topic is Gold and resource stocks. 

Take care

Bill

I hope you enjoy the illustration of the helpless kitten and his benefactor