Happy New Year, and welcome to the first Friday mailbag of 2019.
Let’s begin with a question about gold… And turn to our top gold expert – International Speculator editor Dave Forest – for our answer…
Reader question: Gold or gold miners? Thanks for your feedback.
– Jean B.
Dave’s answer: We’re just preparing some comprehensive research on this for the next issue of International Speculator – due out January 16. But the short version is that physical gold has acted well as a safe haven during past volatile markets (such as we’re seeing today). It tends to hold value during a fall in the wider markets and deliver moderate gains afterward.
Gold stocks, on the other hand, usually see a sharper drop during a correction or crash like in 2008. But they then tend to have much larger rebounds afterward, evidenced most recently by the bull market in gold stocks from late 2008 to 2011, when the S&P/TSX Global Gold Index delivered 185% returns.
So the answer is: depends what you’re looking for. If it’s protection, then physical gold is the way to go.
If it’s outsized growth potential, then go with gold stocks – recognizing that there could be significant dips along the way.
Next up, a question about government control of cryptos for our in-house expert – Palm Beach Confidential editor Teeka Tiwari…
Reader question: I like the idea of blockchain technology to decentralize the banking industry, but it seems the powers that be are working to keep crypto centralized and under government control. Can you share your thoughts on that developing story? Thanks and Happy New Year!
– Ken H.
Teeka’s answer: During the depths of the crypto bear market in 2018, about a dozen financial firms started laying down the foundation to get into cryptos. Among them were the New York Stock Exchange and the Nasdaq. These are the two largest stock exchanges in the world, so they bring a wealth of experience and a ton of reputation to the crypto market.
They’ll also help expand the pool of available buyers this year by about 15 times.
Now that may sound like Wall Street is taking control of bitcoin and other currencies. And the libertarian part of me thinks this is horrible.
We’ll see a transition away from independent exchanges to institutions. And those institutions will probably create an informal cartel like they have around stock trading.
I hate it. But it’s also naïve to think crypto adoption will grow without the help of traditional financial firms.
Remember, there are nearly 500 million stock buyers in the world who have never owned crypto. These people won’t come into cryptos without Wall Street holding their hands.
We have to accept the good with the bad. And our ideology isn’t going to change anything. What’s important is how to profit from what’s happening.
And we’ll profit by owning bitcoin and other cryptos before the rush of institutional money hits the market in 2019.
For more of Teeka’s crypto forecasts for 2019, check out his latest interview in Wednesday’s Palm Beach Daily.
And finally, cannabis continues to be the most controversial topic among Daily Cut readers. Today, Cut editor Chris Lowe responds to a comment and a question about the accuracy of our research…
Reader comment: Your comments on CBD are only partially correct. It has only been approved by the FDA as a prescription pharmaceutical produced by one company and only for a specific form of childhood epilepsy. Otherwise it is still a Schedule I, illegal narcotic.
– Kendrick M. (Legacy Research member)
Reader question: Trump doesn’t drink alcohol or coffee – why do you think he will be for cannabis?
– Anonymous (Legacy Research member)
Chris’ comment: It’s a complicated issue, that’s for sure. You’re right that the Controlled Substances Act (CSA) – signed into law by President Nixon in 1971 – still classifies CBD oil as a Schedule I narcotic. And that the Drug Enforcement Administration (DEA) has only given the green light to “FDA-approved drugs that contain CBD derived from cannabis and no more than 0.1% tetrahydrocannabinols.”
But reality and legality aren’t always the same thing…
As attorney Harvey Silverglate argued in his popular book – Three Felonies a Day – something as simple as faking a sick day could land you in trouble with the feds. As section 945 of the Justice Department’s Criminal Resource Manual defines it, you could be guilty of a “scheme or artifice to defraud” your employer of their “intangible right of honest services.”
And, unless you live in Idaho or South Dakota, CBD oil is already legal in your home state.
So while most forms of CBD oil may not yet be technically legal at the federal level, they’re 100% legal at the state level in 48 U.S. states and the District of Columbia.
And even this bit of murkiness should be cleared up very soon…
In June, Senators Cory Gardner (R-CO) and Elizabeth Warren (D-MA) filed the Strengthening the Tenth Amendment Through Entrusting States (STATES) Act. The bill would amend the CSA to exempt state-legal marijuana activity from its provisions. And, when asked whether he supports the bill, President Trump echoed his campaign promise to allow states to legalize cannabis regardless of federal laws, saying, “I really do. I support Senator Gardner. I know exactly what he’s doing. We’re looking at it. But I probably will end up supporting that, yes.”
The bill is expected to pass as early as spring 2019.
On that note, we’ll leave the last word with Nick Giambruno, Legacy Research cofounder Doug Casey’s globetrotting analyst. As he put it:
Market research suggests the U.S. CBD market is currently worth around $500 million. But it could easily skyrocket to over $10 billion within the next three years. That’s 20 times its current size.
As impressive as that sounds, I think it’s conservative. Sales of Epidiolex, the CBD drug that the FDA approved, are expected to reach $1.3 billion over a similar time frame. And that’s just one CBD product. I think the U.S. CBD market could easily grow 10 times larger in the years ahead.
In fact, Nick is so bullish on CBD’s profit potential, he calls it “liquid money.”
For more details on what to do before the CBD market soars, watch this new video presentation Nick put together.
P.S. It’s not our usual style to heap praise on our gurus just for the sake of patting ourselves on the back. But when one of our experts pens an essay that generates a veritable flood of feedback, we just have to crow a bit.
That was the case with Jeff Clark’s recent Market Minute essay – “Is That Why You’re Up at 1:00 in the Morning?” Here’s a sample of what your fellow readers had to say about it…
Absolutely amazing letter today. Congratulations and thanks!! Best wishes for a happy and strong new year.
– Mitch S.
Really an excellent article on your son. Thanks. An avid fan.
– John W.
Jeff, that’s one of the most awesome messages I have ever heard. God bless you and your family with happiness, health, and abundance.
– Angela H.
This is my first time writing to you, having subscribed for two to three years. I just read your “Is That Why You’re Up at 1:00 in the Morning?” New Year’s Eve Market Minute. It was one of the best minutes that I have ever spent in my life. Thank you for sharing… not only your market knowledge, but most importantly your love, love of the beauty of life, and love of your family and each other.
I am looking forward to many early morning wake ups with your upcoming Mastermind sessions. Wishing you a most healthy, prosperous, and Happy New Year.
– Michael P. (Legacy Research member)
Jeez, Jeff. The next time you send another email like this one, please warn me to grab a tissue! And I am not being sarcastic – I needed one. Luckily, I had one in my coat pocket. I have two kids of my own that I will find a way to pass this truth to when they are old enough.
– Bob H. (Legacy Research member)
Thank you for sending this email. It should mean more to your readers than any tip or market insight you could provide. I know it touched my heart. Thank you!
– Michael W.
Loved your note about the 1 a.m. story with your son! Made my morning and surely put things in perspective. Thank you for sharing it with us!
– Mike B. (Legacy Research member)
Thanks for this message, to me it is your best message… I am praying for your success.
– Jim M.
That is the most beautiful bit of advice I have ever received from a financial guru. Thanks for reminding me. Happy New Year and God bless you.
– John M. (Legacy Research member)
Thank you for sharing this wonderful story and so very important reminder to all of us. May God bless you and your family with a wonderful new year.
– Leslie K. (Legacy Research member)
Thanks Jeff. That is a beautiful message that I will not forget and well timed for our current market conditions. My best to you and your family.
– Paul R.
This is the best essay Jeff Clark has written in all of 2018. A great reminder.
– Chris K.
Thank you for your touching story. Your message was spot on. Happy New Year and thanks for all of your hard work.
– Sue K.
Great comments and very timely. I invest with you, not because you’re smart (you are), but you find ways to constantly remind us of the more important things in life. Looking forward to an exciting 2019!
– Taylor W. (Legacy Research member)