Etai Friedman: Fund Manager goes all in on precious metals – most obvious trade on the planet!
Etai Friedman says he has never seen a bigger green light in his life. It is literally the most obvious trade on the planet. The trade is so good that Etai just rebalanced his portfolio from a very small gold and silver allocation to 75%! And he’s not done yet. He expects to go 100% towards precious metals within the next couple months.
Etai believes that only 2 or 3 things will hold their value in the coming crash.. gold, silver and maybe bitcoin. Gold and silver will explode in anticipation of all the money printing that is in the works.
The monetary easing is spilling into the US, and is taking down the 10 and 30 year treasuries, as well as the long-term interest rates. Every central bank is telegraphing us that they have the intention of debasing their currency in the hopes of spurring economic growth by fostering debt creation. That scenario has played out many times in the last 25 years, and it's not going to work this time. Etai sees a collapse in the world economy and consequent money printing that will go into overdrive resulting in high rates of inflation within the next 5 years.
US stocks are the 2nd most overvalued that they have ever been in history. Stocks are ludicrously priced. The risk/reward in equities makes no sense. You can ride them up for maybe another 5 or 10 percent, but Etai is predicting an 80 percent drop in equities. It may take 3, 4, 5 years for that to happen but it will happen. Corporate bonds will be devastated, as well as government bonds when money printing goes into overdrive. We will go to negative yields.
Also, the end of the government bond market rally will be the world sliding into full-blown recession because it will be extremely deflationary, and when that gets detected by central banks, the money printing will explode. This will mean double-digit levels of inflation, possibly even hyperinflation. At that time, Etai might shift from precious metals into financial assets in the midst of a financial apocalypse where de-leveraging is happening on a major scale and paper money has lost 2/3 to 80% of it's value.
Further, Etai contends that the Fed is done raising interest rates. The next move will be an interest rate cut, but it won't happen overnight. In the first quarter of 2017 we will see a rate cut in the US and then probably negative rates. All of this coupled with the fact that the world can't take on more debt is the biggest green light for owning gold and silver that has happened since the 70's. If you are not long in gold and silver, you are badly positioned.
Talking points from this week’s interview:
• US stocks are extremely overvalued
• US Treasury interest rates will probably go negative
• Stocks and corporate bonds are presently not smart investments
• Every central bank is showing that they will debase their currencies
• Investing long in gold and silver is the best place to be
Etai Friedman is the CEO of Eyal Capital Management, LP. and former head of equity-derivatives trading at MKM Partners. He controls multi million dollar portfolios and has keen insight into the global markets.