Steve Sjuggerud’s “Safest Currency” and “Perfect Hedge”

What to do if the dollar's going to fall? Teaser solutions from True Wealth

By Travis Johnson, Stock Gumshoe, September 24, 2013

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“NOTE: The following presentation is based on information obtained from a closed-door meeting at the New York Stock Exchange. It contains details of the exact timeline when the next stock market crash is set to occur.”

That’s the intro to the latest pitch for Steve Sjuggerud’s True Wealth — so yes, it starts out with a pretty ridiculous promise.

That attention-grabber sounds a lot more oracular than this later bit of the spiel:

“Steve has spent a lot of time and money perfecting this early-warning indicator. As I said, he uses millions of data points – and a very sophisticated computer system – to analyze the markets.

“And right now, according to his analysis, we are fast approaching another major market crash.”

Lots of folks think we’re “fast approaching” another crash — not many can tell you exactly when it will happen, which is the implication of such a “timeline” … and despite the implications of the teaser pitch, I wouldn’t waste a lot of time worrying about whether the next crash is being preordained by insiders on Wall Street (they give the example of Henry Paulson effectively warning big investors and hedge funds about the coming implosion of Fannie Mae before the crash, but even if you think that’s happening and the big banks are operating as a cabal to premanage crises, well, that’s not the same meeting that Steve Sjuggerud is being called into).

Sjuggerud and his publisher and partner, Porter Stansberry, have been warning of the collapse of the US dollar and the likelihood of rampant hyperinflation for several years — it hasn’t happened yet, since low confidence and tighter lending standards have kept buyers too cautious to drive up prices of many goods, and since the rest of the world has continued to cling to the dollar as the US market has looked more pleasant than most of its competitors around the world, but the logic of the decline of the dollar is perfectly reasonable and it certainly might happen. I’ll even accept that it’s inevitable, and has been a long-term trend of decline like most fiat currencies whose overseers like to have a bit of inflation, but “inevitable” doesn’t mean “next month” or “next year” or “in a dramatic fashion.”

To their credit, they have continued to be invested in stocks, from what I can tell of their promotional materials, so that’s important — Steve Sjuggerud has been writing frequently of the continued asset inflation caused by the “Bernanke Asset Bubble” that’s been inflating for a couple of years, and while it hasn’t brought traditional inflation the persistently low interest rates have driven up the prices of many financial assets — including stocks. So it has been an important time to be invested in equities.

I don’t have much interest in trying to predict when the market will crash — it may well be that the behavior of human crowds is somewhat predictable over time, and that the charting and trends that many prognosticators rely on will end up being helpful in making predictions, but I don’t have much faith that any particular person will be right on such macroeconomic issues on any kind of regular basis … at least, not on the kind of timeframe you would need to trade such events. Certainly you can sell stocks or sectors that you think are clearly on dangerous ground, but to predict that about the whole of the market is difficult, indeed — and predicting a crash today (Sjuggerud isn’t doing that, just to be clear, he seems to be laying out a “this is when it will crash” scenario for the future) means you might miss out on a continuing bull market. Or maybe not … the point is, you can’t really know.

But that’s neither here nor there — I do have an interest in keeping my money diversified, and in being prepared to some extent for future crashes, and in being mindful about my dependence on the US dollar. Which is why I thought it would be worth looking for a few of the strategies that Sjuggerud is recommending and seeing how to invest in those strategies.

There are at least two different ads running for Steve Sjuggerud’s True Wealth right now — one signed by Steve about the “single greatest currency investment in the world,” and the other by his brother, Michael Sjuggerud, that teases several investment ideas. It’s Michael’s ad that talks about the “secret NYSE meeting” with 30 rich investors where Steve was invited to share his opinions and his timeline about the market, we’ll try to explain what he’s teasing but I may steal a few clues from Steve’s other ad, too.

Just because we don’t like leaving stones unturned, we can also name “Henry” the billionaire for you, the person who invited Steve to that secret NYSE meeting … here’s how they describe him:

“Keep in mind: For privacy reasons, I don’t have permission to name this billionaire here. Let’s just call him “Henry.”

“I can tell you this: Henry controls a vast business empire. It includes more than a million acres of real estate… as well as investments in agriculture, hotels, banks, and gold mining.

“Back in the 80s, Henry had a close partnership with George Soros. The partnership was dissolved after they made hundreds of percent in gains.”

Don’t know if this will do any good, but Henry the “secret” billionaire with whom Steve Sjuggerud apparently met at the NYSE must be Eduardo Elsztain, a very successful Argentine investor who did indeed help George Soros profit from investments in Argentina about 25 years ago. He’s also a subscriber to Steve’s newsletter and apparently they’re simpatico on many issues, but you’re more likely to be familiar with him as the guy behind Cresud and IRSA, the two major Argentinean real estate investments that trade in the US (Cresud, ticker CRESY, is primarily agricultural; IRSA, ticker IRS, owns malls, office buildings and hotels and develops residential properties).

Not surprisingly for a wealthy man from a country that has a history of hyperinflation, staglfation and confiscation, he’s typically quite focused on hard assets like real estate and gold. And apparently he values Sjuggerud’s perspective:

“… when Henry and his wealthy associates wanted to know when the next financial crisis is set to take place – and how to prepare for it – Steve was invited to share his analysis.

“In a minute, I’ll explain exactly how Steve knows the timeline for the next market collapse. But keep in mind: Even though Steve believes a crash is imminent… he is by no means an alarmist….

“Here’s what he told the wealthy men gathered at the NYSE: There’s a crisis coming (he gave them the exact timeline), but before that you have a once-in-a-lifetime opportunity to make a fortune.”

One of the primary points of the ads is that the US dollar is likely to fall when the market falls — and both Steve and Porter apparently think there will be a rush to the exits when it comes, bringing a crisis — so what does he think you should buy?

The first thing noted is “THE SAFEST CURRENCY PLAY ON EARTH” … so what’s that? Here’s an excerpt:

“When the next financial crisis hits us, my contact tells me the U.S. dollar will almost certainly fall further.

“… there’s one currency out there that’s doing the exact opposite of the U.S. dollar. It’s appreciating every year. And my wealthy contact tells me this is where you want at least some of your savings to be.

“He even showed me a super-easy way anyone can put U.S. dollars into this currency – in just 5 minutes online.

“Why is this currency safer than the dollar?

“Well, for one, this country is immensely rich in natural resources, especially gold. It produces more than 8 million ounces of gold every year (according to 2012 figures)… Which makes it the BIGGEST producer of gold in the developed world.

“To put it in perspective: In the U.S., we have one of the world’s richest gold mines – the Goldstrike Mine in Nevada. Well, this country produces the equivalent of 7 Goldstrike mines – every year.

“And unlike in the U.S., where private companies own gold resources… this country’s government owns its own natural resources. So in a way, this currency is backed by gold.

“Not only that – while the U.S. government is busy printing money, with no end in sight… this nation is not far from being debt free….

“The bottom line is, your money may not be safe in America. And Europe’s financial situation may be worse than ours.

“But there is a developed country out there that’s not up to its eyeballs in debt.

“And right now, while you earn next-to-nothing in interest in your U.S. bank… you can earn more than 6% interest on your cash thanks to this currency.

“Here’s what my contact told me: ‘Mike, money goes where it’s treated best. And I expect this currency could soar beyond anyone’s expectations.’

“The best part is, he showed me a really simple way for Americans to potentially profit from this currency. You can basically do it through any online broker. It will take just 5 minutes.”

OK, so yes, Mike’s “contact” is his brother, Steve, and this country’s currency does match some of the characteristics Steve Sjuggerud always says that he looks for (his mantra has been: hated, cheap, and in an uptrend). It’s the Australian Dollar — Australia is indeed the largest gold producer in the developed world (second largest gold producer in the world, after China), and they did produce about 250 tonnes of gold in 2012 (which is just over eight million troy ounces), and the Australian state does own the nation’s mineral deposits. They’re not debt-free — but compared to developed countries like the US, Japan or their European peers they’re pretty close.

Australia also has much higher interest rates than most of the developed world — a difference that’s probably most stark when you look at plain vanilla stuff like savings accounts and CDs. You can get close to 4% on a one-year CD in Australia, while in the US you’re lucky to even get close to 1% … and even if you tie up your money for five years in a US CD you’ll still get less than 2% from almost every bank. Think of what that would be like for you as an Australian investor — 4% is the “risk-free” hurdle that a potential investment has to beat to be worth your money. Wouldn’t that be nice?

As a corollary to that, Australia has a high-yielding and dividend-focused stock market — their major index would get you close to a 6% dividend yield. In the US you can get risk-free returns of 1% from the bank or a reasonably predictable dividend yield of 2.5% on big stocks, in Australia it’s a similar dynamic, but it’s 4% from the bank vs. 6% from dividends.

So what’s the investment that you can easily make through your broker? Well, you could just buy the ETF that gives you exposure to Australia’s currency — the CurrencyShares Australian Dollar Trust (FXA) … but that won’t get you a 6% yield, it’s more like 2.5% unless you assume you’re going to tack on some capital gains as well. And you can also use leverage to “double down” on the Australian dollar using the ProShares Ultra Australian Dollar ETF (GDAY) — but since that’s a leveraged ETF it’s really just for short-term moves, it tries to double the daily move of the Australian Dollar against the US Dollar but it has not yet, so far, paid any distributions so it won’t get you double the yield and it’s definitely not “safe.”

No, to get a 6% yield on an easily bought exposure to the Aussie dollar I think the best guess is buying the Aussie stock market itself — the most liquid big ETF is the iShares MSCI Australia Index (EWA), which has historically had a large exposure to miners and still does, but which has a much more dramatic weighting in Australian banks and financial companies these days (close to 50%). That probably helps them in the current environment, with Australia continuing to cut interest rates to historically low levels (their benchmark rate is 2.5%, lower than it was during the 2008 crisis) as they attempt to build an economy that’s less dependent on exports to China. The Australian index is about flat on the year, and has done substantially better than the Aussie dollar during that time, FYI.

I don’t know a lot about the Aussie economy or the valuation of the stock market, but both the Aussie market and the Aussie dollar have been bouncing back recently from downtrends, at least a little bit. Do note that even broad markets and major currencies can be quite volatile, it’s not been unusual for the Aussie dollar to move up or down 20% versus the US$ in recent years and the Aussie dollar famously collapsed by 40% in just a couple months during the financial crisis. The Australian economy and dollar have a lot going for them as long as commodities don’t collapse entirely, and in many ways the Aussie dollar is fundamentally a lot stronger than the US dollar, but Australia’s currency is not as hard-wired into the global economy as the US dollar and few people flee to the Aussie dollar when they’re afraid.

How about one more for you?

“this investment opportunity has nothing to do with stocks, bonds, or options. But it’s in a market that’s almost as big as the U.S. stock market.

“Steve calls it the ‘Perfect Hedge’ against a weakening dollar.

“And the best part is, even if Steve is completely wrong about when the stock market crashes… And even if by some miracle Washington abandons its destructive financial policies… the “Perfect Hedge” could still make you money.

“That’s partly because, unlike stocks, this hedge can NEVER go down to zero. It always has value.”

This “perfect hedge” is, I think, … housing. If you can buy a house with a fixed-rate mortgage and the dollar declines and we see inflation, then the value of your house increases but your mortgage payment stay the same. Warren Buffett famously declared that he would buy thousands of single family homes in 2012 if he could find a way to do that efficiently, and he also noted that he thought buying a home was a great way to effectively hedge the dollar for those same reasons. Of course, he came to the conclusion that he couldn’t effectively buy up thousands of single family homes and rent them out, so he didn’t, but others have, particularly hedge funds.

And yes, a house will (almost) always have value, particularly if it doesn’t end up being in a blighted part of the next generation’s Detroit … but do note that when using a mortgage there’s no guarantee that the house’s value will exceed the money you borrowed to buy it. It’s a strong likelihood, particularly if inflation heats up, but it’s not guaranteed.

So is Sjuggerud just suggesting here that it’s still a good idea to buy a home or, if you own a home already, to buy another home and rent it out? Or is he teasing some sort of stock market investment? He has publicly suggested lots of different housing-related ideas in his free articles over the last few years, but since he says it can never go to zero he can’t really be talking about the levered investment funds that are buying up swathes of foreclosed homes — I suspect this is just a recommendation to buy physical real estate still, even with prices recovered somewhat, something he has also reiterated fairly recently, but he has also recommended the big single-home buyers in the last year, particularly Blackstone (BX) over the Winter when he said it was “crazy cheap” (that worked out well for him, it’s up more than 60%).

So that’s what I think Sjuggerud is pitching here as these two plays on a falling dollar — Australia and Real Estate. He also touted something called “Rich Bullion”, which we’ll talk more about tomorrow. My family owns a couple mortgaged properties, including one that we bought this year, so I guess I’ve been implementing that side of the strategy … but though I am overweight in foreign stocks I don’t think I have any current Australian investments. Any feelings about where the dollar might go, and what might be the best way to play that move? Let us know with a comment below. Or if you’ve ever subscribed to True Wealth, by all means, chime in and review it for us by clicking here.


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30 Comments on "Steve Sjuggerud’s “Safest Currency” and “Perfect Hedge”"

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dick
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0
dick
September 24, 2013 3:57 pm

You’re correct FXA and he recos to buy RE to rent. But it’s very local. In my place (LA) prices are back to the good old days. It’s a good letter. As to FXA I fully agree. What’s best than a country that can kick its incumbents after less than a year in power after bad tax decisions? I think Australia is one of the best place to diversify if you’re after yield.
Altogether Sjueggerrud is very positive on the markets in general.

Manfred
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0
Manfred
September 24, 2013 7:10 pm

Well, actually the incumbents were 6 years in power, and they were good tax decisions, but don’t let the facts get in the way of your beliefs…

xoli
Member
0
xoli
September 26, 2013 4:54 pm

I would also like to know more about Manny Backus, I’m new maybe direct me some of your older articles. How about Oxford Club’s Thorium mine in Nevada ?

rbowman
Irregular
0
rbowman
September 24, 2013 4:19 pm

Can you tell me about Manny Backus his touting minute stocks?

vivian lewis
Guest
0
September 24, 2013 4:23 pm
A couple of quibbles and some input. Eduardo Elsztain also has a 3rd US listed company called APSA, Alto Palermo SA, which owns the shopping mall of that name in north Buenos Aires. He tends to shuffle assets around between his companies to manipulate up their prices. He also is involved with some shady fellows in Israel, a bent rabbi among them discussed below. He tried to take control of a holding company in Israel last month but couldn’t raise the money. I have met him a couple of times myself, mostly in Buenos Aires but he even came to… Read more »
vivian lewis
Guest
0
September 24, 2013 5:10 pm

more about Rabbi Yehoshua Pinto, man of the cloth and buddy of Eduardo
Elsztain, if not Messrs Sjuggerad, who are not mentioned, from Globes Israel, a website which also publishes in English:
http://failedmessiah.typepad.com/failed_messiahcom/2012/09/kabbalist-rabbi-promises-investors-2x-to-3x-return-on-money-123.html

hheffner
Member
2
hheffner
September 24, 2013 5:36 pm
I’ve invested in Buccaneer Energy, an Australian company (BCC on the ASX, BCGYF on the OTC, http://www.buccaneerenergy.com/about-buccaneer), in part due to the strength of the Australian dollar, but for other reasons noted below as well. I live near the Cook Inlet region where Baccaneer currently has what appears to be a very successful exploration and development operation in progress. They are drilling in the vicinity of previous wells, and there are transmission, distribution, processing, and large loads such as the Beluga Power plant (serves Anchorage), an LNG export terminal, and fertilizer production plant, all very close to the production sites.… Read more »
Jeff J
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Jeff J
September 24, 2013 6:51 pm
I subscribed to ‘True Wealth’ from the early 2000s to 2007. I remember Steve S. enthusing about the interest rate you could get on accounts denominated in Icelandic Krona. Around about 15% iin 2007 if I recollect. That was before the Iceland banking crisis and the collapse of the ISK. http://www.xe.com/currencycharts/?from=ISK&to=USD&view=10Y OK, Australia is not Iceland but I’ve been wary of Steve Sjuggerud’s calls ever since. 🙂 By the way, this isn’t the EVE Online currency – it’s the real world one but the way Steve talked,, it too was headed into interstellar space. Oh well, I didn’t lose any… Read more »
socrates
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0
socrates
November 3, 2013 6:47 am

He was also terribly wrong on yukos (former Russian oil giant) and only 2 years ago with annaly (NLY),now he thinks the marketbubble is to be continued because of endless QE,but his brother reerring to him as real specialist is warning for the comming collapse,I think he’s not important enough nor his jewish Argentinian pal to have being part of a secret cabal gathering where is decided when the actual marketbubble collapses,it will for shure and maybe sooner than later and I dont need his advice to heed from the trouble comming

Jim Gibson
Guest
0
September 24, 2013 6:53 pm

Some time ago I bought a small holding in Bank of Montreal (BMO) for a dollar hedge plus dividend income. I think it is more or less going as planned. I wonder if the same strategy would work for a good Ausi Bank?

Ron Powell
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Ron Powell
September 24, 2013 8:10 pm

This guy, Stansberry, high school grad, Glenn Beck and their ilk remind me of the Tom Waits line: “There’s a sucker born every minute and you just happen to be coming along”

Ira Cotton
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Ira Cotton
September 25, 2013 5:33 pm

It never fails – whenever Gumshoe publishes an article remotely related to Stansberry, somebody takes a cheap shot. Stansberry only publishes Sjuggerud’s newsletter, he is not responsible for any of the content or recommendations. And what does Glen Beck have to do with investment advice? Here’s the name of another high school grad – Bill Gates (he never finished Harvard).

Jan
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Jan
September 25, 2013 2:43 am

As soon as I saw your teaser I guessed EWA

Enginer
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Enginer
September 25, 2013 6:13 am

I’ve been following the “global warming” and then “Climate Change” debate for years, and was happy to note that Australia appears to be moving away from the former administration’s fascination with Carbon Taxes. This should be very positive for Australian businesses.
(Enginer)

blackjack
Guest
0
blackjack
September 25, 2013 6:33 am
I had friends invest in fixed term deposits in OZ banks The UK pound was tanking and so a good move Fixed interest was 5% and of this 10% is with holding tax leaving a net of 4.5% not bad however I warned them of the exchange rate and that the government was doing all it could with the Reserve Bank of Australia to get the dollar lower as it was making some goods exported not competitive. OZ banks guarantee deposits up to 1 million dollars AAA ratings but beware of the exchange rates as far as real estate goes… Read more »
vivian lewis
Guest
0
September 25, 2013 6:35 am
I posted the wrong article about the bent rabbi, not from Globes Israel. sorry. Here is the right one: Front News Views Features Real estate Israel resources Market prices Events Services RSS Newsletters Advertising About Shlomo SIXT USA GlobesDigital Twitter News Rabbi Pinto to Elsztain: Israel investors will double their money Rabbi Yoshiyahu Yosef Pinto said, “This is the time when Jews of the world should show responsibility and support for the people who live in Zion.” 23 September 12 14:47, Li-or Averbach Rabbi Yoshiyahu Yosef Pinto, who mediated between Nochi Dankner and Eduardo Elsztain in the Ganden Holdings Ltd.… Read more »
black jack
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0
black jack
September 26, 2013 5:43 am

many including China are moving away from the FIAT US$ as its like the emperor with no close
many countries including Australia trade in other currencies beside the USA
unheard of a few years ago but now a reality
China and Russia deal in the own currencies of Gold so i guess its the new way
Asean is also coming up in 2015 and its mooted that they will also trade in a different currency –
No FIAT currency has lasted forever

GlenJ
Guest
0
GlenJ
September 25, 2013 10:24 am

Sounds so wonderful, buy the Aussie and live happily ever after. Trouble is, the AUD is strongly inversely correlated with activity in China because of their trading relationship. Even if gold rallies strongly, but China growth is muted, the AUD will NOT rally. In times of turmoil (check anytime in the past 50 years), the USD is king because of the enormous reserves around the globe. Don’t even think about the AUD unless China can rally during the crisis.

GavinH
Guest
0
GavinH
September 25, 2013 5:53 pm

Action in the Aussie Dollar is also dependent on action in the Yen. When you see moves in the USD-JPY pair, you’ll often see moves in AUD too as carry trades wind and unwind.

toofuzzy
Member
-1
toofuzzy
September 25, 2013 1:41 pm

From your teaser of this article “Safe currency and 6% dividend” I guessed EWA
I guess you are rubbing off on me!

Bob Norikane
Guest
0
Bob Norikane
September 29, 2013 12:17 pm
I hold three Australian energy stocks both for their prospects and the Australian currency. As another poster noted, the slowdown in China’s massive consumption of all commodities has slowed with their economy. They also appear to be transitioning from infrastructure investing to encouraging consumer consumption. But they are still growing at multiples of the developed world and need massive amounts of energy to complete their transition to the top of the world economic ladder. So I have been holding Sundance Energy, SEA.ax/SDCJF, for several years. An Aussie exploring the shale basins in the US. They specialize in buying land early… Read more »
rene6985
Member
0
rene6985
September 29, 2013 1:50 pm

I invest my money Triangle petroleum TPLM, from one website.
Can you give more information if I will hold this stock for longor not ?

eemyam
Irregular
0
eemyam
October 31, 2013 2:37 pm

For what it is worth, as I am not a stock broker; Near term support is @ $10.06. If it breaks $9.46, I would sell or leave very minimal shares. Long term support is @ $6.36 or 200dma. Time to take some profits, as it hit resistance at $11.38. I watch charts; they are the most reliable indicators of future movement.

Gary Provenzano
Guest
0
Gary Provenzano
January 18, 2014 11:36 am

It would be great if I could get into this. How and/or where do I buy this secret currency?

Koichi Ito
Guest
0
Koichi Ito
March 2, 2014 11:15 am

Norway and Singapore has the most safest and sable currency, because both countries are least corrupted nation in the world.

vivian lewis
Guest
0
March 2, 2014 5:28 pm

we are looking into another Australian stock, this time a company which is being spun off by its Australian parent. I have assigned a skeptical writer to the subject, Martin who used to live Down Under. I like skeptical writers. The company is Westfield which operates shopping malls in the US and Britain; it will be spun off by the parent Westfield in Oz which also has malls in New Zealand, and will then merge the Down Under operations into a local REIT. Watch this space.

vivian lewis
Guest
0
March 2, 2014 5:32 pm
You can buy Norwegian stocks some of which are also run by crooks (but not Jewish crooks). You can buy lots of quite sensible stocks in Singapore. Look into the world of American Depositary Receipts. While some of these shares trade only on the grey market there are plenty of listed ones. Unlike a pure currency play which is for specialists, a stock offers you some protection on the upside and the down. If the S$ or the NOK go up your ADR in US$s will be worth more. However, because most ADRs are global companies, you will lose some… Read more »
William Armstrong
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0
William Armstrong
May 23, 2015 11:20 pm

Vivian: I greatly enjoyed and appreciate your input in this and other gumshoe threads. Thanks.
P.S. Not Jewish. Presbyterian Scot, who is left-handed & doesn’t play golf.

vivianlewis
Member
167
vivianlewis
May 25, 2015 10:34 am

Hi Mr. Armstrong
thanks for spelling out your ethnicity. I promise never to try to play golf with you. NB I no longer am part of the stock gumshoe community for reasons related to Dr KSS so if you
want to keep getting my ideas you have to subscribe to http://www.global-investing.com
best wishes for Memorial Day

vivianlewis
Member
167
vivianlewis
May 25, 2015 10:44 am
oh, I forgot to mention that Rabbi Yoshiyahu Pinto has been jailed in Israel for fraud. Schande vor die Goyim is what Jews should say, meaning it is bad for our reputation among non-Jews. Rabbi Pinto was involved in a corrupt election for the US Congress for a seat in Staten Island, but got away before the Feds came after him. Unfortunately he could not resist continuing his crooked ways in Israel which is not as soft on bent clergy. As for Eduardo Elsztain, a fellow-Argentine, he is the principal behind several US Nasdaq stocks like Cresud, Alto Palermo, and… Read more »
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