Investing In The Post-Corona World

Incrementum Advisory Board Discussion of April 8, 2020, with Special Guest Rick Rule

The Incrementum Fund’s Advisory Board held its quarterly meeting on April 8. This time renowned resource stock investor Rick Rule, the President and CEO of Sprott US Holdings Inc., joined the discussion as a special guest. As always, there is a download link to a transcript of the conference call in PDF format at the end of this post.

Rick Rule, CEO of Sprott US Holdings Inc., and renowned investor in the commodities sector.

Obviously,  the discussion focused on the suddenly rather dramatically altered investment landscape in the wake of the COVID-19 pandemic. After shutting down large parts of the economy, fiscal and monetary authorities in developed nations have embarked on fiscal and monetary interventions on an unprecedented scale.

Just how extraordinary these interventions are can be gleaned from a chart of total assets held by the Federal Reserve system. What started out as a “happy little money tree” late last year, when the Fed first began to support repo markets after an apparently unexpected dislocation and then followed this up with “not-QE” in the form of $60 billion of t-bill monetization per month, has morphed into the monetary equivalent of the world’s tallest skyscraper:

The Fed’s balance sheet: lurching from one crisis to the next.

To be sure, all of this was expected to happen well before the pandemic struck – it just wasn’t expected to happen so soon or so fast. It is not knowable yet how precisely this will play out in the long term, or where the threshold lies at which the currencies issued by central banks are finally called into question.

Dr. Powell’s standard prescription.

What is certain is 1. such a threshold does exist and 2. both the economy and the investment landscape have been altered quite significantly and (at least partly) irrevocably.

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