"'Act big' now to save economy, worry about debt later."
This recent headline sums up Treasury Secretary Janet Yellen's economic stance. And that stance has set up the most obvious long-term bet in the markets today.
Our government is about to spend... and spend big. Yellen's attitude toward that spending is indicative of the entire Biden administration.
President Joe Biden has put forward a plan for another $1.9 trillion in stimulus. And there's talk of an additional infrastructure-spending bill as well.
This comes after a year when government spending was the highest on record. The two 2020 stimulus bills totaled more than $3 trillion.
Clearly, "act now and worry about debt later" is more than just a talking point... It's real policy. And it will continue to be as we move through the rest of 2021.
I'm not saying that this is good or bad. That argument isn't one I'm interested in. But looking at the ramifications of this spending is important to us, as investors.
Today, I'll share the obvious bet it's setting up today – and the easiest way you can take advantage of it...
To me, the outcome of "act now and worry about debt later" is certain. We're going to have a lot more dollars out there... dollars that are going to be worth less and less in the future. And that's an incredible tailwind for a true store of value...
Of course, I'm talking about gold.
Gold is the most obvious long-term bet in today's market. Government spending is about to rise dramatically. That means the number of dollars in the system is about to go up dramatically.
On the other hand, the gold supply isn't going up much at all. It typically increases by less than 2% a year. And that sets up a clear supply-and-demand equation...
We've got lots and lots more dollars out there and roughly the same amount of gold. And that means gold priced in dollars should go up dramatically.
Surprisingly, this hasn't happened yet...
Yes, the metal hit new all-time highs for the first time in nearly a decade last August. It broke above $2,000 an ounce. But gold didn't end the year on a hot streak. Instead, it fell for most of the last half of the year.
This sets up an incredible opportunity. The long-term story for gold is hugely – and obviously – positive. But it hasn't started working yet. That gives you a rare opportunity to act.
There are plenty of ways to do it. You can make a risky bet by buying gold stocks. But the most straightforward way to make this trade is by simply owning physical gold.
For an even easier way to make the bet, you can buy the SPDR Gold Shares (GLD). This simple fund tracks the price of gold. And it'll be a sure winner as this opportunity begins to play out.
Regardless of how you do it, you need to have some gold in your portfolio. Given what's happening in our government, it's the most obvious long-term bet I see in the market today.
Please, make sure you're taking advantage of it.
Good investing,
Steve
Further Reading
Owning gold in times of extreme volatility is a no-brainer. And with more dollars being printed every day, the price of gold is likely to soar in the near future. But owning this type of gold-related asset can lead to even bigger gains... Get the full story right here.
"In a bull market, a lot of inexperienced investors can look really smart owning stocks," Corey McLaughlin writes. But when the Melt Down finally begins, wise investors will know that they've got to own gold... Read more here: Get Ready for the Next Great Bull Market in Gold.
The government printing more money will likely send gold prices higher. And this gold miner will soar as gold climbs to new heights...
HIGHS AND LOWS
NEW HIGHS OF NOTE LAST WEEK
Alphabet (GOOGL)... tech "World Dominator"
Microsoft (MSFT)... tech giant
Sea Limited (SE)... Singaporean tech giant
Palo Alto Networks (PANW)... cybersecurity
BlackLine (BL)... cloud-based accounting software
Workday (WDAY)... cloud-based software
Zendesk (ZEN)... customer-service software
eBay (EBAY)... online marketplace
Diebold Nixdorf (DBD)... "cardless" ATMs
Dell Technologies (DELL)... electronics
CBRE Group (CBRE)... real estate services
Lennar (LEN)... homebuilder
NVR (NVR)... homebuilder
MSA Safety (MSA)... safety equipment
Dick's Sporting Goods (DKS)... sporting goods
Scotts Miracle-Grow (SMG)... plant food, cannabis
Freshpet (FRPT)... healthy pet food
Darden Restaurants (DRI)... restaurants
Texas Roadhouse (TXRH)... restaurants
NEW LOWS OF NOTE LAST WEEK
Not many... It's a bull market, you know!
