Sovereign Man

This morning I reached out to my old friend and colleague Peter Schiff to talk about some uncomfortable truths that very few people are discussing right now. I wrote to you about this yesterday: banks are in trouble. You can’t expect to shut down practically an entire world economy that is in debt to the tune of $250 TRILLION and not expect massive loan defaults. The last financial crisis in 2008 was caused by a spike in loan defaults. We’re about to see another spike of loan defaults due to all the layoffs and business closures… only this time the problem is much, much bigger than it was in 2008. And Peter and I discuss some potential scenarios. Be forewarned, they’re not pleasant. Think about it like this: before the last financial crisis, US government debt was ‘only’ about $9 trillion. It’s nearly tripled since then. The Federal Reserve’s balance sheet prior to the last crisis was $850 billion. It ballooned to $4.5 trillion, more than 5x as much. This means that we could see US government debt reach $40 to $50 trillion, the Fed’s balance sheet exceed $20 trillion. Could that possibly have negative implications for the US dollar? You bet. Peter and I talk about what might happen with the dollar, and more. You can listen in here. * Editor's note: As you'll hear in the podcast, Peter promotes a number of his businesses, mutual funds, etc. We need to be clear that those comments are his alone, and that we are not recommending in any way that listeners make any investment with any of Peter's businesses.

I thought in this age of insanity that we are living in, nothing would surprise me anymore. But sure enough, there was a headline in the Financial Times the other day, “Central banks should consider giving people money.” It seems almost impossible that someone could believe in something so ridiculous. And yet this is the world we are living in. The path to prosperity is now based on unelected central bankers conjuring millions of dollars out of thin air. Bankrupt governments are issuing bonds with negative yields, meaning they are being paid to go deeper into debt. And there are more than $13 trillion of these negative yielding bonds in the world. If anything this makes a compelling case for why people should consider owning gold. It’s a store of value with a 5,000 year track record of withstanding inflation, political crisis, and monetary stupidity. I’ve been suggesting people consider buying gold for quite some time, especially over the last year. I argue that the supply of gold, is actually declining, yet the demand will increase in large part due to all of this central bank lunacy. And that has absolutely been happening. The price of gold is up more than 25% over the last year, and just surpassed $1,500 per ounce. But unlike most other assets like real estate, stocks, bonds, etc, gold is still far from it's all time high. There could still be plenty of gains ahead. And silver would have to triple before it reaches it’s all time high. Every summer for the past eight years, I’ve enjoyed a week or two in the italian countryside at a 400 plus year old villa. Here I relax with friends, family, business colleagues, and some of our Total Access members who fly in from around the world, to break bread and enjoy really stimulating and entertaining conversations. This year Peter Schiff has been one of my guests. He’s an old friend who shares many of the same beliefs. And when our conversation this morning turned to gold, I thought it appropriate to record it, and make a Podcast out of it. In our conversation we talk about why gold and silver have plenty of room to rise, and a number of different ways to invest.

Each year, I invite an incredible mix of young people from more than a dozen countries to join me in Lithuania for an intense week of business, investing and entrepreneurship classes taught by the smartest people I know (it’s also entirely free for the students who attend. I pay out of my own pocket for everything). I do it because I feel strongly about self-education. It’s how I got to be where I am today. So I thought it would be an opportune time to give you my latest thoughts on how to get an education that really makes a difference in your life. Education has no age limit (for example, attendees at our camp range from 17 to 47 years of age). But today, I want to specifically address those young people either starting their university studies, or just about to graduate. Getting a university degree is one of the most important and impactful decisions you’ll ever make. And we’re expected to make this decision when we’re still teenagers, too often without afterthought as to what a decision like this really means for our future. In this podcast, I talk about how to approach the decision, whether or not to go to university, how to pick a major and how to manage debt. I also discuss compelling steps that you can take either instead of a university education, or to complement it. Listen here to find out how to make the most empowering choices you can about your education. (And if you’re 57 years old and considering doing something new with your life, this podcast will definitely be worth your time. It’s never too late to change your trajectory and make excellent choices.)

Last week in its annual report, the US government reported that Social Security’s long-term, unfunded liability now exceeds $50 TRILLION. Moreover, they state that the Social Security and Medicare trust funds will run out of money in 2034. This is the government’s own calculation. Bottom line: The younger you are, the less you should count on Social Security in your retirement plans. You must take matters into your own hands and save independently for retirement. But that’s easier said than done, right? The traditional concept of ‘saving for retirement’ is to set aside some money from your monthly paycheck, and put it in something like an IRA. That works fine for some people. But what if you simply don’t have any more money from your paycheck to save? Or what if you’ve already hit the maximum amount you’re allowed to contribute to a conventional IRA? Fortunately, there are great solutions. We’ve written about SEP IRAs in the past. But there’s another structure I’d like to discuss called a Solo 401(k). A Solo 401(k) is an incredibly flexible, robust retirement structure that allows you to set aside potentially tens of thousands of dollars of income from a ‘side-business’ each year. This could be just about anything-- selling products on Amazon, generating advertising revenue from YouTube videos, Airbnb rentals, freelance consulting, anything. And almost anyone can do this. You could literally be a 15 year old teenager walking dogs on the weekends for extra cash, and stash that money into a Solo 401(k). If you’re currently an employee at a US-based company, you might already have a regular 401(k); it allows you to make pre-tax contributions to your retirement, and sometimes the employer even matches what you put in. The plan probably doesn’t offer much leeway in terms of where you can invest that money, though. At best, they probably give you a list of mutual funds from which to choose. But a Solo 401(k) – a.k.a. an Individual 401(k), Self-Directed 401(k) or Self-Employed 401(k) – lets you control where your funds are invested. And unlike a conventional IRA – another common retirement structure – it lets you contribute MUCH more money to your retirement before it’s taxed. It just has to be done with income from self-employment, or from a side job. With all of the money-making options available today, it’s not difficult to stash a lot more money into a tax-advantaged retirement account. There are lots of details to consider when opening a Solo(k), but here’s the general idea: First, since we’re talking about self-employment income, you have to think of yourself as both an employer and an employee. As an employee of your own business, you can make a total of $19,000 in retirement contributions this year if you have a 401(k), plus another $6,000 on top of that if you’re over the age of 50. But you can contribute even more than that since you’re also the employer in your business. For this tax year, the maximum total contribution to a 401(k) between an employer and employee is $56,000 (for those under the age of 50) and $62,000 (for those 50 and over)… so that’s potentially tens of thousands of dollars in extra contributions you can make. More importantly, these contributions can be deducted from your taxes. So when the Bolsheviks come to power and ratchet up tax rates to 70%, you’ll be able to take a LOT of money off the table to set aside for your retirement that they can’t touch. Plus, Solo 401(k)’s are incredibly flexible.

Today’s podcast is with Marin Katusa. Marin is a world-class resource investor and lead analyst for Katusa Research – his publishing company, where he shares the details of many of the private investments he makes. Marin’s been investing in resource stocks for twenty years. And he’s gained a reputation as a guy who can get things done (and get the best terms) when raising capital to invest in companies – over the years, he’s put hundreds of millions of dollars to work in the sector. In our discussion with Marin, he explains his boom/bust/echo theory of investing in natural resource stocks and where we are today in that cycle (it happens to be the part of the cycle where you can find the greatest value). We asked Marin to walk you through some actual examples of private investments he’s made so you can learn when you should be looking to invest (and also understand the massive, upside potential when buying resource stocks near the bottom of a cycle). I’d encourage you to listen to the end, when Marin shares the names and tickers of his two favorite gold stocks today (like the rest of the gold sector, they’ve been pretty beaten up). He also shares a few details of his most recent investment – the largest personal bet he’s ever made. So if you want to hear about where we are in the gold market, which types of gold companies you should be investing in today and hear Marin’s outlook for the gold sector going forward, you can tune in right here.

Today’s episode of the Sovereign Man Podcast features non other than Sovereign Man’s Chief Investment Strategist, Tim Staermose, talking about not one but two highly successful, targeted investment strategies with proven track records. If you are a regular SMC or 4th Pillar reader, then you’re familiar with Tim’s wit, his financial probity, and his impressive stock picking skills. Today, he’ll tell you how he goes about looking at the markets at a time when nearly everything is overpriced. Also, if you’re curious about Tim’s top recommendation today, you can get more details here… A quick general summary of what’s discussed: * Intro - A bit about the markets… what Howard Marks and Warren Buffett think… * 2:30 - A bit about Sovereign Man’s Chief Investment Strategist, Tim Staermose, and his track record * 3:30 - Why Tim is finding great deals in this “pre-frontier market” * 6:30 - What investors can do in today’s market, the mistakes most investors make, and the difference between the macro and the micro investor * 9:30 - Tim’s take on “deep value” investing * 12:00 - The other strategy Tim has been employing lately * 13:00 - The analysis Tim does when deciding how to invest in takeover arbitrage * 14:30 - The advantage of investing in markets based on British Common Law * 16:00 - Why today is a good time for M&A investing * 16:30 - Tim’s take on gold acquisitions - the majors… * 18:30 - … and the juniors * 19:20 - Where gold prices might go * 19:45 — Tim talks about one of his most exciting recent picks We hope you enjoy and learn from today’s podcast.

Today we bring you a fresh episode of the Sovereign Man Podcast, where Simon Black unpacks why the people in charge have no idea what they’re talking about… and how you can protect yourself from their policies. Freshman politicians want to nationalize entire industries. They want to increase the marginal tax rate to 70% or more. They want to ban corporations from buying back their own stocks unless those companies meet stringent requirements. They want to raise capital gains taxes. In short, they want your money. In this episode, Simon gives you a roundup of bad policies, why they don’t/won’t work… and the one big thing you should do if you don’t want the Socialist train to run you over. A quick general summary of what’s discussed: Intro - It’s here, and… they have “NO IDEA!!!!” (Jim Cramer was right.) * 2:00 - Why stock buybacks are stupid… but why the government should drop the idea of regulating them * 7:20 - What all this is REALLY about * 9:15 — Equality vs. Freedom and why you can’t have 100% of both * 16:50 — The rise of Socialism in the US and what’s behind it * 22:00 — Taxes: Why raising them never solves income inequality (and what does) * 28:00 — How NOT to become wealthy * 31:00 — Bernie Sanders and Donald Trump said the same thing * 32:30 — Solutions for you, including what to focus on now * 34:00 — Simon’s warning — and his big Obama quote of the day * 36:45 — One place that is getting it right * 37:45 — Proof that they don’t REALLY want free education * 39:00 — The best entitlement ‘demands’ you’ll hear all day * 44:00 - The ONE thing you need to do if you want to protect your money in an age of Socialism We hope you enjoy and learn from today’s podcast.

Welcome to another edition of the Sovereign Man podcast. As we enter 2019, you’ll start to see more podcasts from us. And you also might notice a few changes. We’ve upped the production value of our chats with Simon. And we’ll continue to improve both the production and the content of our podcasts. And we’d love to hear your feedback on our efforts. In today’s podcast, Simon gives us an update from on the ground in Puerto Rico… and explains why you should absolutely consider moving to Puerto Rico if you have a business, earn investment income or want to freelance and significantly lower your tax bill. Plus, Simon shares some specifics on how to get started taking advantage of Puerto Rico’s tax incentives (and who can benefit from Act 20 and Act 22). It’s an outrageous deal to be able to live in paradise and pay essentially zero tax. So if you have any interest in Puerto Rico… and you could potentially benefit from moving yourself or your business there, please do not miss this discussion. And make sure to subscribe to our podcast on iTunes or Google Play. Here’s what you’ll hear about in today’s episode: Intro - Simon talks about how amazing life is in Puerto Rico, something which surprised him. (He’s not a beach guy.) About 3:00 in — Why moving to Puerto Rico is like moving to Florida… with major financial benefits 5:45 — What Simon gave up to move to Puerto Rico, and why it reminds him of South Park 8 minutes — Why Simon sees voting with your wallet as much more powerful than voting at the booth 10:00 — The big difference between living in a high-tax state like California and living in PR, and how the tax incentives work 18:15 — details about Act 22, including whether it works for crypto people, investments in US companies, etc. 27:27 — details about Act 20, what constitutes a “qualifying” business 31 — Can an employee on salary do this? 32:54 — Are you still paying self-employment, FICA, etc.? How do the taxes work? 36 — How does the IRS consider you a resident of PR? What do you need to do? 36:30 — Do you create an LLC or a corporation? 38:30 — How is the rise of socialism going to affect programs like these? Will these incentives last? 47:50 — Do you need to be wealthy to reap these advantages? What is the income threshold or net worth threshold to make moving to PR a good idea? (Plus, Simon’s decision not to use “rule of thumb” ever again.) 50 — The power of compound-compound (double compound) interest, and whether Einstein said that thing about it. 54: Why Simon is no longer skeptical about the PR tax incentives 57: Why the requirements for Act 20 are better than they’ve ever been (and why you should lock them in… now) 1:09: How expensive is it to live in PR? Are there “middle class” options? Plus, what life is like there 1:11: Drawbacks to living in PR 1:12 Opportunities in PR 1:20: Summing it all up — and Simon’s advice on first steps We hope you enjoy today’s podcast and learn a lot about expanding your freedom and opportunities. And make sure to subscribe to our podcast on iTunes

Between the year 1054 and 1224, there were 83 civil wars in Russia. That’s about one civil war every two years. Through the middle ages, feudal lords were periodically murdered in peasant revolts. When people sense too much unfairness in the system, the pitchforks come out. Wealth and inequality have been with us for all of recorded human history, and probably before that. Things get rocky when that gap grows large enough, or is even just perceived as large. Invariably, this inequality gets “corrected” either by a government or an armed revolution. Wealth is either taken by the state and redistributed, or taken by pitchfork, machete, or gun wielding mob. We’re kind of at the point now where wealth and income inequality has once again gotten pretty pronounced. Just a small sign of the times we discuss in today’s podcast involves a school in Great Britain that has banned expensive jackets. The idea is to protect the feelings of kids whose families cannot afford the jackets. So in order to avoid “poverty shaming,” parents won’t be allowed to send their kids back to school after Christmas break with top brands like Canada Goose and Moncler. So if all the students can’t afford a $900 jacket… then nobody is allowed to wear one. Invariably, the “solutions” don’t lift the disadvantaged up, but simply drag the privileged down. And wealth isn’t the only type of inequality. What’s next? Forcing the best athletes to carry weights, or bringing down the smart kids’ test scores? It’s nothing new. Back in 2008, the Occupy Wall Street movement gave voice to the same feeling. Someone at the top is screwing the little guy. Inequality is part of human nature. We are not all going to be born with the same skills, intelligence, desires, and preferences. In today’s podcast, we get into the palpable anger over inequality that is boiling over, and the types of absurd responses we see.

Last week I recorded the most memorable podcast I’ve hosted in some time. Jim Grant, editor of the famed Grant’s Interest Rate Observer, joined us for a discussion. Grant’s, in my opinion, is one of the finest financial publications out there. And it’s a treat to have a guy like Jim on the podcast. He’s written Grant’s for 35 years. And in that time, he’s made some incredible calls (including first writing about the excesses in housing in 2001) and some not so incredible ones… But, most importantly, he’s amassed a cult following of the best and brightest in business and finance. Central bankers, Wall Street CEOs, hedge fund billionaires… they all read Jim. In other words, his opinions count. So I hope you’ll tune in to hear what he has to say… In our discussion, Jim and I talk about the current state of the economy, the latest Fed announcement and some of the insane excesses in the market today. And Jim sums of the absurdity of today’s market in one, important paradox. Finally, we share a few ideas on how to protect yourself and maybe even profit from these excesses. Also, at the end of our discussion, Jim shares a very special offer for Sovereign Man readers. To learn more about the exclusive deal we’ve arranged, just click here… And, you can listen to the podcast here.

It’s been a hell of a week here in the Italian countryside. I’ve been treating my team and some friends to a sort of mini-vacation at a 400-year old wine and olive estate that we’ve taken over. The views, the food, the wine, the company… it’s all incredible. Each night about two dozen of us dine outside under a canopy of grape vines, and the conversations are so stimulating that the dinners often last for 7 or 8 hours. Being in Italy, though, it’s hard to not notice the obvious deterioration of this beautiful country. Italy was the world’s superpower TWO times in its history-- first during the time of the ancient Romans, and second during the early Renaissance when city-states like Venice and Florence became the dominant economies of Europe. Each time they screwed it up. Too much wasteful spending, too much debt, too many regulations, too many wars, too much debasement of the currency. It doesn’t matter how strong your country or empire is. If enough time goes by with those destructive forces at play, the country weakens and loses its power. It’s inevitable. No country in history has ever been able to indefinitely indebt itself, overspend, wage endless wars, etc. without consequence. And it would be foolish to think that this time is any different. We’re seeing precisely those trends all over the world today, especially in the west. And to boot, at least here in Europe, nearly the entire continent is suffering from multiple crises at the same time. Place like Italy, Greece, etc. are dealing with the constant threat of their looming debt crisis. But they also have failing banking systems with the need for constant bailouts. They’re dealing with a fertility crisis and shrinking populations. Frequent political crisis (as we saw here in Italy just a few months ago). Pension crisis. Immigration and refugee crisis. What could possibly go wrong? There are a few bright spots on the continent. But I think Europe is in pretty bad shape for the long-term. We cover this in today’s podcast… and speaking of crisis, we manage to work in some discussion about Elon Musk’s latest drama, plus round out the podcast with a quick summary of this year’s amazing entrepreneurship camp that we just finished last week. You can download the episode here.

In today’s podcast, I share the details of a deal a well-known private bank just offered me (and its roster of other high-net worth clients). It’s a bad deal in every way… the asset in question is valued insanely high, there’s likely a ton of debt attached to this deal and I doubt anyone who invests will make their money back. Still, I’m confident this deal will get done. It’s classic top-of-the-cycle economics. If you look back throughout history, during every boom, there’s one asset that gets insanely bubbly. In the 90’s, it was tech stocks. In the 2000’s, it was real estate. And I tell you what that asset class is today… and why, just like every time in the past, this will end in recession. I also looked back to see how long it takes for the economy to correct after the Fed starts raising interest rates. You should listen in for the reveal… But I will tell you, the Fed started raising interest rates in December 2015. And, if history is any indicator, a recession could happen very, very soon. Luckily, as an individual investor, you don’t have to participate in this madness. You’re allowed to wait it out on the sidelines. Because better deals will be on the way. And you’ll have the opportunity to buy incredibly high-quality assets for pennies on the dollar. That’s what I’m doing. And I share a few ideas toward the end of today’s discussion. You can listen in here…

Last week, Paolo Savona, an Italian man no one outside the country had ever heard of, was denied the position of finance minister. Italy’s President denied his appointment because Savona is anti-euro. The President believes Italy should remain part of the euro. I wrote a Notes about the entire situation last week. But the point I discuss in today’s podcast is that this situation should not have been a major deal… but it wreaked havoc across global markets. Even some of the world’s safest assets sold off. So if this turmoil in Italy can cause such chaos, what will happen when there’s a MAJOR crisis? How should you prepare? The event that will end this 10-year bull market will catch almost everybody by surprise. That’s the nature of the beast. So you must take time now, while you’re still thinking clearly, to come up with a game plan of how you’ll handle the next downturn. Because when the event comes, and stocks crater, it will already be too late… emotions will take over. On the podcast, I discuss the types of questions you should be asking yourself and the decisions you should be making today. I also share some of my experiences from my recent travels to Australia, the Philippines and Bangkok. You can tune in here.

In today’s podcast, I share more thoughts on Puerto Rico including my experiences opening a business there. While the island has its problems, I’m still bullish on the long-term future given Puerto Rico’s incredible tax incentives (especially after meeting with their government leader and seeing how open they are to productive people moving in). I also harp on the latest drama in Argentina… Less than a year after issuing 100-year bonds, the country (which has a long history of default) is in economic turmoil. And the largest investors who bought these bonds – including JPMorgan and Fidelity – are sitting on huge losses. These huge investors are so starved for yield, that they willingly lent money to a default-prone government for 100 year. But, as individuals, we have much better options to earn a decent return… with DRASTICALLY less risk. I share a few of those options near the end of today’s discussion. You can listen here…

I’m writing from San Juan, Puerto Rico today. The Sovereign Man team is here to host 150+ Total Access members over the weekend. And on today’s podcast, we discuss the amazing tax benefits in PR... and why crypto wealth is flocking to the island. These people think crypto is going to the moon. And by being residents in PR, they’ll pay 0% capital gains tax on any appreciation after they move here. So I share my thoughts on this, and why they may be in for a tax surprise with their crypto holdings - even with the amazing tax benefits. Also, following one of the big themes we’ve been covering this year, I discuss fanaticism surrounding crypto (both the bulls and the people calling it a fraud)... and why you should banish fanaticism when making investment decisions. You can listen in here.