“We Are on the Precipice”

By James Rickards

I don’t believe many people grasp the enormity of the global food crisis we’ll be facing in the months ahead. But the world could be on the verge of a massive humanitarian crisis. Let’s dive in…

The supply chain collapse preceded the war in Ukraine, but the war has only intensified the problems. You can see it with your own eyes when you walk into a supermarket and find long stretches of empty shelves in stores that used to be chock-full of food and other merchandise.

Even goods that are available such as gasoline are being sold at much higher prices. Prices for gasoline (and diesel, which is critical for goods transportation) have more than doubled in the past nine months. All of this is clear. The question is will it get worse from here?

Crypto’s Crash: 100-to-1 Leverage Goes Poof!

By Pam Martens and Russ Martens: May 16, 2022

BitcoinCrypto was in full-blown crash mode last week, wiping out more than $300 billion in market value. TerraUSD, a so-called stablecoin that is supposed to trade at a “stable” $1 value, crashed to a few cents on the dollar. Its sister cryptocurrency, Luna, likewise imploded.

Then there was Bitcoin, which Warren Buffett has called “rat poison squared.” Bitcoin plunged further last week and is now down more than 30 percent year-to-date. So much for the hype that it would be an inflation hedge like gold.

It's Time to Capitalize on the SPAC Scrap Heap

Raising money for an unknown purpose isn't exactly an easy sell...

As I explained yesterday, 19th-century industry titan Henry Villard was only able to pull it off because he spent years establishing a reputation as a rainmaker... and people were lining up to invest alongside him.

That's how Villard established the first of what would now be known as a special purpose acquisition company ("SPAC").

Most sponsors today need to entice investors with deal-sweeteners like warrants and stock rights – goodies that allow investors to buy discounted shares in the future, should the stock appreciate.

If the sponsors don't find a target within two years, they return the investors' cash, plus interest. So for those early investors, it's a no-risk venture.

The Holy Grail of Investing Comes to Crypto

Over the years, one of my biggest challenges as a newsletter editor has been convincing people that 29.9% annual gains are the holy grail of investing.

For instance, we’ve recorded an average annualized return of 29.9% in my options newsletter since it launched in 2018. That’s more than double the S&P 500’s annual return of 14% over the past 10 years.

If you come from a Wall Street background like I do, you understand most of these guys would sacrifice their firstborn to rake in 29.9% per year.

And I get why people aren’t blown away by 29.9% annualized gains, though…

Asymmetric ideas like crypto and private deals are super sexy. They give you the chance to potentially turn $500 into $5,000, $50,000, or even $500,000.

These aren’t just pie-in-the-sky projections, either. My subscribers have had the chance to see gains of 14,478%, 20,377%, and 30,877% from my crypto recommendations.

By comparison, compounding double-digit gains year after year is slow and boring… But it’s one of the surest ways I know of to build wealth…

The Biggest Rate Hike in 22 Years

By James Rickards

As widely expected, the Federal Reserve raised its target rate by 50 points today, its largest increase in 22 years.

Some market analysts were even predicting a 75-basis point hike. But today, Jay Powell reassured markets by claiming that he’s not considering such a move.

The stock market soared after Powell’s reassuring announcement. The Dow gained over 900 points today, with most of the gains coming after the Fed’s announcement. The S&P gained 124 points, while the Nasdaq gained 401.

Gold had a solid day, gaining over $13.

Importantly, the Fed also announced today that it’ll begin draining its balance sheet next month (in other words, begin quantitative tightening). The balance sheet is expected to decline $47.5 billion per month starting in June, increasing to a cut as much as $95 billion per month in three months.

Afterhours Massacre as Amazon Plunges, Apple, Intel, Tesla, even Meta Dive

Meta? Didn’t it just spike? Friday is going to be interesting.

By Wolf Richter for WOLF STREET.

A bunch of the biggest tech companies reported earnings after the market closed today, and their shares tanked, and Friday is going to be interesting, after today’s short-covering action.

Amazon [AMZN] shares plunged as much as 11% afterhours and currently trade down 9%, at $2,631, down 30% from their 52-week high, and back where they’d first been in June 2020.

This debacle is occurring despite the huge bout of financial engineering in early March to stem the slide of its shares at the time: Its announcement of a most-splendid but useless 20-for-1 stock split and an even more splendid share buyback program that it wants to fund with an enormous amount of borrowed cash. But the bloom has come off the rose, even tried-and-true financial engineering doesn’t do the trick anymore, and shares just let go (data via YCharts):

Why does Ethereum have an intrinsic value?

1.

What is Ethereum?

Ethereum is a decentralized, open-source blockchain and the first network to launch smart contract functionality.

Ethereum was launched in July 2015, and in the span of a few years, it increased considerably in value due to its wide range of decentralized application (DApp) offerings. The explosive rise of decentralized finance (DeFi) and nonfungible tokens (NFTs) have sealed its success as the most actively used blockchain network.

Furthermore, its native currency, Ether (ETH), has solidly maintained its second position by market capitalization and daily volume in the cryptocurrency space.

2.

What is Ethereum’s intrinsic value?

Before identifying what is unique about Ethereum, let us first explore the definition of intrinsic value and how it applies to digital currencies like Ethereum.

In finance, the intrinsic value represents the perceived or actual value of an asset or a currency. It should not be confused with the market price because assets can be over or undervalued.

The secret to retiring a millionaire

Among the many great quotes from Warren Buffett is this gem: “The stock market is a device for transferring money from the impatient to the patient.”

I love this quote because it highlights the importance of being patient with your investments. 

The simple fact is this: Time is the most important ingredient to generating wealth. With enough time, anyone can get rich.

This is true because of the magic of compound interest. 

You might have read about this idea before—but it’s a critical concept for novice and experienced investors alike… and it’s all the more important to remember in today’s difficult market, when everyone is running scared.