Welcome to another edition of The Daily Cut Friday mailbag, where we put your questions to our Legacy Research experts.
And whether it’s changing the tax structure… profiting from commodities… getting started with cryptos… or finding your own little hideaway… there’s something for everyone today.
First up is a question about Delta Report editor Jeff Clark, after he told Cut readers that 2019 should be a great year for options traders…
Reader question: I’ve been following Jeff for a while and think he’s a smart guy. As a former fundamental hedge fund manager, I learned the hard way how important technicals are.
In any event, I am interested in the service and I’m going to give it a try, especially since I’m trying to devote my attention to work helping others, rather than investing; but I will be maintaining a portfolio. Since I’ve been trading predominantly in options lately, due to the risks I see in the markets, Jeff’s service makes a lot of sense for me.
I’m curious if there is a batting average you can share for Jeff’s performance? In advertising for services like this, the service usually talks about all the wins, but rarely do they mention the losses and I’m wondering what the ratio is, as well as any way to attribute percentage gains vs. percentage losses on the whole, and whether there’s any particular correlation with up or down markets?
– Mitch S. (Legacy Research member)
Jeff is a humble guy, so we won’t put him on the spot for an answer. We don’t need to, though…
Jeff’s numbers speak for themselves.
Since its inception in January 2017, Jeff Clark’s Delta Report booked 63 winners out of 76 trades for an 83% win-rate and an average profit of 20%. And if you include the “scalp trades” Jeff shares in his Delta Direct blog, you’re looking at 121 winners out of 153 trades for a 79% win-rate and an average return of 16%.
(You can view Jeff’s full Delta Report track record, including closed trades, right here.)
Now, if you also want to know how Jeff’s strategy fares in market downturns, all you have to do is look at his performance during the global financial crisis. In 2008, Jeff was writing Stansberry Research’s Short Report advisory… and his win-rate for the year was 60%. He booked 37 winners out of 62 trades, with an average gain of 23%.
Moving on… Last week, Bill Bonner Letter coauthor Dan Denning told the Cut audience about his “bolt-hole tour” through New Zealand. But some readers took issue with Dan’s advice…
Reader question: Your analysis may be accurate, and we may be in for a major decline that makes 2008 look like a party. But are you friken serious? Going to hide out in New Zealand or any other country with the other millionaires…
Who do you think most of your readers are? Guys that can go hide out on some island or escape to another country for a year or more? C’mon guys.
– Robert S. (Legacy Research member)
Reader question: I’m not wealthy, but even if I were, it would be hard to leave the U.S. for a place like New Zealand, while the rest of my family remains behind, i.e., siblings, children, and grandchildren.
So, hopefully you can find a “bolt-hole” in the U.S., especially in Texas where I live, so we can maintain a family environment and lifestyle.
Please let me know. Thanks in advance.
– Edward D. (Legacy Research member)
Dan’s answer: These are excellent points and foremost on the mind of a lot of readers/nomads/preppers I’ve met. It’s one thing if you already have tens of millions in the bank, or if all you have to look out for is yourself. But what if you’re not a multimillionaire and you have a wife/husband, kids or grandkids?
The first thing I’d say is that you can’t take care of anyone else if you can’t take care of yourself and your money. This is why the investment/financial side of preparing is our focus in The Bill Bonner Letter. It’s based on the idea that keeping what you have and protecting it from crash/confiscation is more important than making a fortune on “the next big thing.”
But then what? I’m working on a rating/index which gives each bolt-hole city a score based on a combination of factors. Cost of living, quality of life, taxes, access to quality medical care, nearness to a regional or international airport, and more. Stay tuned for that.
I’m also taking invitations on where to go for my next bolt-hole trip. I’d intended on upstate New York and New England over the winter. But it just looked too cold, even for a Colorado boy. So I took advantage of my second passport and came to the Antipodes.
Open to suggestions for where to visit next, including Texas!
As a special bonus, we’ve made Dan’s previous bolt-hole reports available to Daily Cut readers. Just click the links below to access them.
Hope you enjoy them…
Our next question comes from a reader who’s concerned about our bullish stance on platinum. Crisis Investing editor Nick Giambruno and International Speculator editor Dave Forest are on hand with the answers…
Reader question: So, with the advent of EVs (electric vehicles) there will be no need for catalytic converters and their platinum-coated supports. Will this elimination of CAT converters mean a sharp decline in the demand for platinum? It seems so.
– Jack W.
Nick’s answer: Electric vehicles present some risk to the platinum market. But I think that risk is limited.
EVs either use a hydrogen fuel cell – which requires platinum and palladium – or a lithium battery – which does not. Most of the buzz surrounds car manufacturers like Tesla who use lithium-based batteries.
Of course, mass adoption of lithium-battery EVs would be bad for platinum and palladium demand. And that may happen, say, seven to 10 years from now. But I expect supply disruptions in South Africa much sooner, likely in the next year or two. That’s bullish for platinum prices.
In any case, let’s suppose the world does adopt EVs on a mass scale sooner than anyone expects. Hydrogen fuel cells would still power some of these vehicles.
At the last Sprott Natural Resource conference in Vancouver, mining legend Robert Friedland claimed that if hydrogen fuel cells power just one in 10 new Chinese vehicles, they would need, roughly, as much platinum as the world’s current annual production.
I also recently spoke with resource industry expert Rick Rule about this very topic. He told me that he’s not worried about it either. Mainly because for a reasonable period – by that I mean five, six, or seven years – the increasing market share that EVs enjoy relative to internal combustion vehicles is fairly small.
Dave’s answer: EVs certainly could reduce demand for platinum and palladium in catalytic converters, but the time frame for meaningful impact is much ahead of what we’re looking at in terms of investment.
I’d also add that platinum especially derives more usage from investment and jewelry than from industrial applications. In North America, we tend to think of gold as the go-to investment metal – but in Asia, platinum is often the place people look to store value.
It’s important that we don’t overestimate the impact of automotive demand on platinum prices. And here’s why…
In 2013, 35% of global platinum demand came from the auto sector. Investment, jewelry and industrial applications accounted for the other 65%. But by 2018, the situation changed. Auto demand grew to 45%, while investment, jewelry, and industrial dropped to 55%.
That’s a huge shift. But what’s interesting to note is that, during that same time period, platinum prices fell off a cliff. During 2013, the metal traded between $1,400 and $1,700 per kilogram… today, it’s barely above $800.
I wouldn’t be too concerned about catalytic converters going the way of the Dodo.
Next up… another answer from Nick Giambruno. This time, Nick fields a reader’s question about taxes.
Reader question: Would a flat tax for all people and corporations help level the playing field?
– Jack R. (Legacy Research member)
Nick’s answer: First let me state, I think taxation is morally indistinguishable from theft. I think the personal and corporate income tax should be abolished completely, and salt sewn in the soil so they can never grow back. There’s nothing better that could instantly turbocharge the U.S. economy and make the U.S. a beacon of economic freedom again. But that’s not going to happen, except in my dreams.
That being said, the premise of the question avoids the true problem, which is government spending. As long as the government spends money, it will find some way to make you pay for it.
The simple answer is… tax structure is just window dressing. The end result is the same, no matter what the crooks in Washington call it.
That’s why I’m not interested in shifting the burden around and fiddling with the tax code to try to level the playing field and somehow better accommodate the atrocious amount of government spending. I’m interested in eliminating the trillions of government spending – mostly on welfare and warfare – that creates the need for the government to extract wealth from the economy in the first place.
Finally, we’ll end today with a simple question about cryptocurrencies…
Reader question: I’m confused. There are too many options to set up crypto accounts and wallets. If you were going to set up new accounts for the first time, what would you do?
– Roy B. (Legacy Research member)
You’re in luck, Roy. The experts on our Palm Beach Research team put together a cryptocurrency quick-start guide. And you can view it for free right here.
Just remember world-renowned crypto expert Teeka Tiwari’s advice…
Don’t bet the farm on any crypto. You just need a tiny grubstake for the potential to make life-changing gains.
So don’t put more than $200–$400 into any single crypto, or, if you’re a larger investor, no more than $500–$1,000.
Have a good weekend…
Regards,
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James Wells
Director