Tips From Legendary Contrarians To Prosper During This Crisis

In this video released by Future Money Trends (click to subscribe), several legendary contrarians explain their vision on economic developments in the coming years. Some of them provide tips on how to thrive and prosper in these challenging economic times.

Peter Schiff and Harry Dent explain between timestamp 4.15 and 6.55 their high level economic outlook. Schiff expects a severe economic crash, much worse than the one of 2008. Dent sees a huge deflationary wave coming based on demographics.

No matter how one looks at it, the monetary policies from central banks prove to widen the gap between rich and poor. It is a wise thing to increase revenues or to wisefully invest (taking a long term horizon). Here are some tips from some contrarian investors:

How can young people with no economic means still thrive?

Doug Casey‘s answer: You have to produce a good or service that others are willing to buy. The only thing you take with you are the skills in your hands and the knowledge in your mind. The rest they [government] will take away from you, and they will very likely do it.

Arm yourself with specific marketable skills and knowledge, which means you need to learn stuff (which is not the stuff from college).

How to look at resource investing?

Rick Rule’s answer: You have to buy resources when they structurally undervalued and your investment horizon needs to be 5 to 10 years > those who don’t have that time horizon (which is most investors) will lose in resource investing.

There is an increasing challenge on a global basis as 3.5 billion people at the bottom of the social pyramid become rapidly more rich. Several hundreds of millions Chinese were able to afford a higher food standard which is calorie, energy, and commodity intense.

In addition, ONLY for speculative minds, there is a key success factor when investing in junior mining companies: talented people. Junior resource companies who have the ability to become producing mining companies are speculative but can be hugely rewarding. One of the most decisive criteria are the people (management teams) who are heading those companies. An actual example? Amir Adnani who is heading Uranium Energy Corp and Brazil Resources Inc.

What to expect from gold with its declining price over the last 2 years?

Jim Rickards his answer: Gold should go down in a deflationary environment initially, but if deflation gets bad enough the government will make the price go up as they get desperate to create inflation. If you want inflation and if you have tried everything (money printing, cutting rates, currency wars, Operation Twist, forward guidance, nominal GDP targeting, …) and you still did not get the inflation, there is one thing that always works: devaluing the currency against gold. There could come a time that deflation gets so bad that the Fed and the Treasury raise the price of gold, not for gold investors but because of generalized inflation. If gold goes up, silver and oil and everything else will go up along with it. That is exactly what happened 1933. That is one path.

The other more likely path is that the Fed keeps printing money and finally succeeds in changing behavior. Velocity of money picks up and inflation picks up on its own.

 


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