In Jim Cook's Archive


If I had written in 2019 that the entire world would soon be gripped by a dangerous epidemic, Russia would start a war by invading its neighbor and inflation would explode, you would suspect I’d gone off my rocker. My point is that nobody knows exactly what’s in the future. There are sure to be more nasty surprises ahead. We might be able to tell a few things about our future by looking at a prior period of rising inflation and the attempts to quell it. In the late 1970s inflation marched steadily higher and in 1980, the monetary authority broke its back. Interest rates were in the 20% range. Money supply growth was choked off. Asset prices collapsed.

That’s what worked back then, so its likely they will attempt a similar solution today. It’s likely we will have a period of asset deflation. Valuations will shrink and highflyers will tumble. Therefore, it would be wise to hold some assets that are less likely to fall especially those that have failed to rise and have little gain to give back. The best of these would be silver. In a period of deflation and liquidation, the best thing to own will be assets that have yet to appreciate. They will have the least downside risk whereas the former highflyers will have the most to lose. You can already see that in the sinking technology stocks. The nice thing about silver is that it doesn’t have much downside at today’s price levels and it has the potential to go up dramatically.

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