Why You Shouldn’t Be Able To Drive To Your Bank

Notes From The Field By Simon Black

October 10, 2019  San Juan, Puerto Rico

Why You Shouldn’t Be Able To Drive To Your Bank

What is your favorite coffee shop or restaurant? Which doctor’s office and dentist do you prefer to go to?

I bet these are all within, say, 15 minutes away of your home. That makes sense--who wants to drive three hours to get coffee, or take a plane to their dentist?

But what about your bank?

If you live in the USA or Europe, chances are, the banks in your neighborhood probably aren’t that great.

Europe in particular has a lot of problems; according to the European Banking Authority (one of the EU’s biggest financial regulators), the largest banks in Europe collectively lack more than 100 billion euros to meet minimum capital requirements.

And in some countries (like Italy) the banking system is already teetering on the edge of insolvency.

Banks in the US have their own challenges-- like constantly abusing their customers’ trust.

Wells Fargo is the poster child for these types of scandals. They sold customers car insurance they didn’t need, and charged erroneous fees which got 20,000 cars repossessed.

A computer glitch once caused over 500 Wells Fargo customers have their houses foreclosed on.

Wells Fargo illegally repossessed vehicles of soldiers who were deployed overseas, and accidentally charged late fees to more than 100,000 customers when it was the bank that was at fault.

Wells Fargo employees also infamously created fake customer accounts in order to hit their sales goals. Other employees were caught selling customers’ social security numbers.

This sort of thievery is sadly commonplace.

Yet for all these risks-- all the abuse, the shaky financials, etc., banks pay almost nothing to depositors. You’re lucky to earn half a percent these days, and most checking accounts pay literally zero.

There are additional issues to consider as well—

To continue reading, please go to the original article here:

https://www.sovereignman.com/trends/why-you-shouldnt-be-able-to-drive-to-your-bank-25768/

The Next Big Investment Trend

Notes From The Field By Simon Black

October 9, 2019  San Juan, Puerto Rico

The Next Big Investment Trend Is On Sale Right Now

In July 1994, an ex-hedge fund VP left his cushy Wall Street job and started a new company called Cadabra, Inc.

He wanted to capitalize on an emerging trend that was called the “Information Superhighway” back then, what we now know today as the Internet.

Cadabra was an early ‘dot-com’ company. But as more and more people started accessing the Internet in the mid-1990s, the number of dot-com companies exploded.

Before long, there were countless entrepreneurs raising billions of dollars and taking their dot-com companies public.

Most of these companies were losing tons of money and had no hope of ever turning a profit.

But investors didn’t care. The Internet was the next big thing, and the stock prices of even the stupidest dot-com companies were soaring to record highs.

The bubble eventually burst. Investors collectively lost more than $5 trillion as the share prices of dot-com companies plummeted. Most dot-coms went out of business altogether.

Cadabra was one of the few dot-com businesses that survived the crash. But by then, of course, it had already changed its name to Amazon.

This is the nature of just about every major emerging investment trend.

It starts in a quiet stealth phase where only a handful of people even know the opportunity exists.

It then slowly builds momentum as savvy investors and fund managers catch on. And then it eventually becomes mainstream and turns into a giant frenzy.

Finally, just like investor euphoria sent prices to irrational highs, the bubble ultimately bursts, investors panic, and prices crash to irrational lows.

At the end of the cycle, sanity is finally restored, and a handful of Phoenixes rise from the ashes.

That’s what happened with the dot-com bubble. And we saw this play out recently with crypto as well.

Ten years ago, nobody even knew what Bitcoin was. Only a handful of very technical people had heard of it, let alone understood it.

To continue reading, please go to the original article here:

https://www.sovereignman.com/investing/the-next-big-investment-trend-is-on-sale-right-now-25748/

Gold’s Long-Term Gains Outperformed Warren Buffett

Notes From The Field By Simon Black

October 7, 2019  Santiago, Chile

Gold’s Long-Term Gains Have Even Outperformed Warren Buffett...

Warren Buffett, despite his extraordinary investment success, has a rather famous and long-standing love/hate relationship with precious metals.

Maybe it started with his dad-- Congressman Howard Buffett of Nebraska-- who, as a staunch advocate for the gold standard, argued to his colleagues on Capitol Hill that “paper money systems have always wound up with collapse and economic chaos.”

Warren himself acquired a record-setting 128 million ounces of silver back in the late 1990s… which he later sold at a profit in the early 2000s.

But to listen to him talk about precious metals these days, he’s always negative.

Buffett often quips that if you took the world’s entire supply of gold and melted it together, it would form a cube of about 68 feet (~21 meters) per side and be worth around $9 trillion.

With that same $9 trillion, you could buy every share of Apple, Disney, Google, Microsoft, JP Morgan, Exxon Mobil, all the farmland in the United States, all the developable land in Manhattan, and still have more than a trillion dollars left over.

This is Buffett’s central argument: gold doesn’t produce anything. So it’s much better to invest in a productive asset like a business, farmland, etc.

Sure, I’d rather own a profitable, productive asset than a pile of metal.

But Buffett is completely wrong to compare gold to productive assets… they’re apples and oranges.

Gold isn’t an ‘investment’. It’s an insurance policy against paper currencies losing value over time. So a MUCH better comparison for gold is CASH.

To continue reading, please go to the original article here:

https://www.sovereignman.com/trends/golds-long-term-gains-have-even-outperformed-warren-buffett-25699/

To your freedom & prosperity, Simon Black Founder, SovereignMan.com

1,015,736,491,184 Reasons To Have A Plan B

Notes From The Field By Simon Black

October 1, 2019  En Route to Chile

1,015,736,491,184 Reasons To Have A Plan B

Precisely one year ago today, the US federal government opened Fiscal Year 2019 with a total debt level of $21.6 trillion:

Specifically, the US federal debt on October 1st last year was $21,606,948,183,180.23

Today is the start of the government’s 2020 Fiscal Year. And the total debt is now $22,622,684,674,364.43

That means they accumulated more than $1 TRILLION in new debt over the course of the 2019 Fiscal Year.

Think about that for a moment:

FY2019 was, literally, the BEST year EVER measured by short-term US financial performance. The stock market reached an all-time high. Real estate prices reached an all-time high.

Corporate profits are at record highs. Personal income is at a record high. Unemployment is hovering near an all-time low.

And all of these factors drove US government tax revenue to an all-time high; Uncle Sam has never had more income in its entire history.

Plus, there were no major foreign wars or natural disasters. No banking crises or economic panics. No massive bailouts.

And if you recall, the US government was shut down for most of the month of January due to a budget conflict, so federal spending was at a minimum for a good chunk of the year.

Yet despite this bonanza of good news, the national debt STILL increased by more than a trillion dollars!

HOW IS THAT EVEN POSSIBLE??

Here’s an even more startling way of looking at it:

In Fiscal Year 2012, the government spent $359 billion paying interest on its debt. In Fiscal Year 2015 they spent $402 billion. In FY2017, $458 billion.

In the Fiscal Year 2019 that just closed yesterday, they spent more than $540 billion just paying INTEREST on the debt.

Do you see the pattern?

To continue reading, please go to the original article here:

https://www.sovereignman.com/trends/1015736491184-reasons-to-have-a-plan-b-25656/

The Only Fix Is Taking Matters Into Your Own Hands

Notes From The Field By Simon Black

September 30, 2019   Bahia Beach, Puerto Rico

The Only Fix Is Taking Matters Into Your Own Hands

On Friday evening, the government here in Puerto Rico made an announcement to local retirees that many of them would have their pensions cut.

Poof. Just like that.

The pension cut is part of a debt restructuring plan to help Puerto Rico emerge from bankruptcy, which they declared in May 2017.

Bankruptcy is complicated, so I’ll explain a bit here.

When individuals, corporations, and even local government take on so much debt that they can no longer make payments, they go through a specific legal process called bankruptcy.

During the bankruptcy process, a judge temporarily relieves the bankrupt from making any principal or interest payments on their debt while all sides work out a solution.

The bankrupt puts all of their assets and liabilities on the table, and then works with the bondholders to figure out a plan that everyone can live with.

Sometimes they’re successful. Occasionally you’ll hear about a big company (often an airline) ‘emerging from bankruptcy’.

This means the company was able to work out a deal with its bondholders, i.e. the company agrees to sell some assets and cut costs in order to pay the bondholders, but the bondholders agree to take a loss and only recover, say, 50 cents on the dollar.

Once the deal is settled, the debt is struck off the company’s balance sheet and they begin operating normally again.

Sometimes, though, a deal cannot be reached. And the Bankruptcy Court appoints a special representative to liquidate the company’s assets and split up the proceeds among the bondholders.

But governments can’t exactly do that. Bankruptcy courts don’t have the latitude to sell off police cars, fire trucks, and elementary schools in order to repay government bondholders.

And that’s why Puerto Rico’s debt negotiations have taken so long.

Puerto Rico has more than $70 billion in debt, worth nearly 70% of GDP. And making payments on that debt was consuming nearly 30% of government tax revenue every year.

That’s totally unsustainable, and declaring bankruptcy was inevitable.

To continue reading, please go to the original article here:

https://www.sovereignman.com/international-diversification-strategies/the-only-fix-is-taking-matters-into-your-own-hands-25652/

To your freedom & prosperity, Simon Black Founder, SovereignMan.com

“We” Not So Crazy after all…

Notes From The Field By Simon Black

September 26, 2019  Bahia Beach, Puerto Rico

“We” Not So Crazy after all…

I’ve never really been prone to schadenfreude-- feeling satisfaction from someone else’s misfortune.

But I am a big believer in the Karmic justice. If you’re a dirty scumbag who constantly lies, cheats, and steals, sooner or later the universe is going to catch up with you. And I love seeing justice served.

That’s why I couldn’t help but feel delighted when I saw that Adam Neumann, founder of the so-called ‘We Company’, stepped down as CEO two days ago.

Neumann’s company operates the WeWork office business. I’ve dumped on this plenty of times-- it’s been the latest flavor of the month among all the other heavily loss-making ‘tech’ startups like Snap, Uber, Lyft, etc.

These companies lose billions of dollars per year and no one cares. The more they lose, the more valuable they become.

But WeWork was something truly special… so incredible it almost seemed made up.

Sure, WeWork lost $1 billion just in the first six months of 2019 alone. But no one cares about that; all the big tech companies lose money these days.

And yeah, WeWork isn’t actually a tech company-- they’re in the real estate business. But no one really cares about that either. Adam Neumann says they’re a tech company, so people just went along with it.

WeWork doesn’t really own any real estate either. In fact, the company owns practically no assets at all. But no one really cares about that either. Assets schmassets.

WeWork’s Board of Directors screwed its shareholders by awarding nearly dictatorial control to founder/CEO Adam Neumann, and stripping equal voting rights from other shareholders. But no one cares because, hey, that’s what SnapChat did. And look at how well they’re doing.

Neither did anyone care that Neumann retained voting control of the company even while simultaneously selling off hundreds of millions of dollars worth of stock to personally enrich himself before the company has earned a single penny in profits for shareholders.

Nor does anyone care that Neumann is a textbook megalomaniac who thinks he should be President of the World.

Neumann has notoriously engaged in the most egregious conflicts of interest, including, famously, borrowing money from WeWork to buy an office building, only to lease it right back to WeWork at a profit for himself.

But, amazingly enough, no one even cared about that.

The one thing… the ONE THING… that made people lose their minds, was that Neumann sold the rights to the word ‘We’ to the company for $6 million.

That’s right.

To continue reading, please go to the original article here:

https://www.sovereignman.com/investing/we-not-so-crazy-after-all-25635/

To your freedom & prosperity, Simon Black Founder, SovereignMan.com

.How Anti-Fragile Are You?

Notes From The Field By Simon Black

September 24, 2019   Bahia Beach, Puerto Rico

How Anti-Fragile Are You?

I arrived back home to Puerto Rico late last night after traveling back from our Total Access event in Las Vegas.

It was probably around 11:15 pm when I climbed into bed. And, within minutes, just as the sound of the waves outside was carrying me off to sleep, the whole house started violently shaking.

It turned out to be a magnitude 6.0 earthquake, about 20 miles off the west coast of the island.

I lived in Chile for seven years before this-- one of the world’s earthquake capitals-- so I’m no stranger to seismic activity.

But earthquakes are EXTREMELY rare in Puerto Rico… as in, they almost NEVER happen. People simply do not expect them.

Hurricanes, tropical storms, etc., sure, those are common occurrences here.

And you might remember that Puerto Rico was almost wiped out from 2017’s Hurricane Maria. It devastated the island and much of the Eastern Caribbean, and two years later they still haven’t recovered.

Today there’s supposed to be some Tropical Storm coming through, which, by comparison to Hurricane Maria, is barely a bit of drizzle.

But the government here is on pins and needles, and so anxious to show that they’re ready for anything that they closed schools, many government offices, and even called up the National Guard…

I can’t help but feel bad for them. They’re so scarred from Hurricane Maria two years ago that they overreact in desperation at the first warning sign of a storm.

And then, in an instant, something completely unexpected happened: Puerto Rico was hit with a 6.0 earthquake, and the government has no idea how to react.

I need to caveat all this by saying I really love Puerto Rico. Moving here last year was a great decision. And though I’ve long praised the island’s unparalleled tax incentives, what keeps me living here is the lifestyle.

To continue reading, please go to the original article at

https://www.sovereignman.com/trends/how-anti-fragile-are-you-25620/

To your freedom & prosperity, Simon Black Founder, SovereignMan.com

.What I Learned From Having My Mind Manipulated

Notes From The Field By Simon Black

September 23, 2019  Las Vegas, Nevada

What I Learned From Having My Mind Manipulated This Weekend

There are few times in life when you have the opportunity to witness a master at work… someone who is truly the best in the world at what they do.

Whether it’s the world’s greatest chef, a champion athlete, a master pianist, or even the guy who holds the world record for being able to recite the first 70,000 digits of Pi, it’s always exciting to see the best at work.

Apollo Robbins is the best in the world at what he does.

Apollo has been called a lot of things: magician, illusionist, mentalist, and even ‘gentleman thief’. But he’s best described as a master of the human mind… and unparalleled expert in manipulating it.

I’ll give you a great example—

Apollo was my personal guest at our annual Total Access meetup in Las Vegas over the weekend; and on Friday night during a cocktail reception, he wandered through the crowd performing various tricks to educate and entertain our members.

And in one particular case, I was the Guinea pig.

Apollo asked me to think of any four letter word, as well as the hour and minute of random time of day (like 2:15 or 11:40), and write both of them down on a piece of paper.

Now, there are approximately 5,000 four letter words in the English language, and 720 different timestamps I could have chosen from 12:00 through 11:59.

So between the two, that makes a total of roughly 3.6 million different combinations, meaning Apollo would have had a 0.0000277% chance of guessing both right.

Those odds are so low he had a better chance of being struck by lightning.

Apollo and I started talking about my selections and he asked me if I felt the choices were mine, and mine alone.

I absolutely did. I picked my word. I picked the time. In fact, just to be sure that I wasn’t being manipulated, I chose my word by selecting from random letters.

There was a tree nearby, so I chose a T. A hotel worker was carrying a bottle of water to one of our members, so I picked W. A person standing nearby me was named Steve, so I chose an S. I picked a random vowel (‘A’) and then arranged the letters into a word.

There’s no way Apollo would have known any of those things—where we would have been standing, who would have been nearby, or how I would have even randomly selected my letters. And he acknowledged this later… he had no idea.

As for the random time that I selected, I chose 7:22, based on dialogue in a scene from the movie Pulp Fiction (which was released 25 years ago today).

Again, there’s no way Apollo would have known that. We’d never discussed it, and I don’t think he had even seen the movie.

So I was convinced my choices were 100% mine, and mine alone.

Yet Apollo opened his wallet and pulled out a small, folded photograph of his bedside table.

Sure enough—the photo showed a notepad on his nightstand with a single, four-letter word written on it. And it was the one that I picked.

There was also a clock on the nightstand showing a time of 7:22. And it was seriously spooky.

Most people’s first reaction is to presume that Apollo is some sort of space alien, time traveler, or visitor from an alternate universe.

But he’s none of those things. He’s a practiced master of the human mind, including the ability to manipulate it.

To continue reading, please go to the original article at

https://www.sovereignman.com/trends/what-i-learned-from-having-my-mind-manipulated-this-weekend-25611/

.The Bolsheviks Even Want To Tax Your Toaster Oven

Notes From The Field By Simon Black

September 17, 2019  Bahia Beach, Puerto Rico

The Bolsheviks even want to tax your toaster oven

In a concept paper called “Treat Wealth Like Wages”, the ranking member of the US Senate Finance Committee laid out a plan late last week to radically overhaul the tax code in a way never before seen.

Just as you’d expect from the title, his central idea is to tax wealth; if you own just about anything, this Senator wants you to start paying an annual tithe to the federal government.

It’s sort of like how property tax works: you don’t actually -own- your own property. You’re just renting it from the government.

They charge you a tax each year-- some percentage of the property’s value-- to use the land. And if you don’t pay your property taxes, they’ll come and take it from you.

Now they want to create a similar federal tax that applies to almost every major asset you own.

This includes CASH in your bank account. Financial assets like stocks and bonds. Private business and partnership interests. Your entire real estate portfolio. Collectible assets like art and fine wine.

Never mind that you’ve bought these assets with money that’s already been taxed. Now they want to tax it again, every year. And when you die they want to tax it again.

They even included Individual Retirement Accounts.

Heck, for that matter they even proposed taxing “household goods” beyond a certain threshold. So you could even pay tax on your toaster oven.

What I found really interesting about this proposal, though, is that the guy who authored it is NOT one of the 10,000 people running for President right now.

In fact, this US Senator (Ron Wyden from Oregon) isn’t even up for re-election until 2022, at which point he’ll likely retire.

We’d expect to hear about wealth taxes from all the Bolshevik presidential candidates who are seeking attention and headlines. Or from some firebrand Twitter Queen who hates rich people.

But Ron Wyden is neither of those. He’s a seasoned, 70-year old US Senator who created a detailed 33-page plan on why AND how to implement a wealth tax.

This shows that the idea is really catching fire.

The wealth tax, of course, joins a slew of other taxes and hikes that have been proposed by the motley gang of Bolsheviks.

To continue reading, please go to the original article at

https://www.sovereignman.com/international-diversification-strategies/the-bolsheviks-even-want-to-tax-your-toaster-oven-25576/

To your freedom & prosperity, Simon Black Founder, SovereignMan.com 

.The Most Profitable Business In The World

Notes From The Field By Simon Black

September 16, 2019  Bahia Beach, Puerto Rico

The Most Profitable Business In The World

More than 5,000 years ago on a hilltop located in modern-day Georgia (the country, not the state), a group of people from the prehistoric Kura-Araxes civilization gathered their primitive tools and began to dig.

It took years. But they eventually burrowed 20 meters deep into the earth and constructed a network of elaborate tunnels.

Thousands of years later, archaeologists and geologists figured out why: the Kura-Araxes were digging for gold.

And that site, known as Sakdrisi-Kachagiani, is the oldest gold mine in the world. It predates Ancient Egypt and even Mesopotamia.

And it shows that, even in prehistoric times, our early ancestors valued gold.

Nearly every great civilization from every corner of the planet since then has continued to mine for gold-- from Greece and Rome to China’s Zhou dynasty in the first millennium BC, to the Inca and Aztec.

Mining was so important in ancient times, in fact, that wars frequently broke out over control of the best-producing mines.

In many respects, a gold mine is the ultimate asset. Even to this day we still use the term ‘gold mine’ to refer to a fantastic investment.

And obviously gold mines themselves can be phenomenal investments.

We’ve been talking about gold a lot lately and discussing different ways to own it. I’ve encouraged you to avoid buying into a gold ETF, and instead to buy the most prominent physical coins (like Canadian Maple Leaf gold coins).

But one very interesting (and completely different) way to invest in gold is to buy shares of mining companies.

Mining companies generate profit based on the difference between their mining costs and mining revenue.

So as the price of gold increases, mining company profits tend to increase as well, pushing their stock prices higher.

Among miners, the largest are known as the ‘majors’ or ‘senior producers’, including companies like Goldcorp, Kinross Gold, Barrick Gold, Newcrest Mining, Gold Fields, etc.

To continue reading, please go to the original article at

https://www.sovereignman.com/investing/the-most-profitable-business-in-the-world-25570/

To your freedom & prosperity, Simon Black Founder, SovereignMan.com

.The Price Of Gold Just Hit A Record High

Notes From The Field By Simon Black

September 12, 2019  San Juan, Puerto Rico

The Price Of Gold Just Hit A Record High

A few hours ago, the European Central Bank announced a bonanza stimulus package: interest rate cuts, money printing, quantitative easing, the whole nine yards.

Europe’s economic growth has ground to a halt. The German economy actually shrank last quarter, according to official statistics.

So the European Central Bank is throwing everything including the kitchen sink at this problem. Their stimulus package is like a monetary defibrillator trying to shock Europe’s economies back to growth.

It’s pretty amazing when you think about it: interest rates in Europe are already NEGATIVE. They’ve been cutting rates for years, and it hasn’t worked.

Back in July 2008, the European Central Bank’s main interest rate was 3.25%.

By the end of 2008, it was clear the global economy was slowing down, and the central bank had slashed interest rates to just 1%.

But they kept going.

By 2013, the ECB had reduced its primary interest rate all the way to zero.

And in 2014, they took the unprecedented step of cutting rates even further-- to NEGATIVE 0.10%.

European rates have been negative now for FIVE YEARS. Yet Europe’s economies are still in the dog house.

These results completely defy prevailing economic wisdom.

According to the ridiculous playbook that nearly all central bankers use, cutting interest rates is supposed to stimulate economic growth.

If interest rates are lower, it makes it easier and cheaper for people to borrow money. If it’s cheaper to borrow money, people buy more stuff… which creates more economic growth.

But that’s not happening.

They’ve been cutting rates, even below zero, to the point that you can actually get PAID to BORROW money in Europe. Yet those economies are still stagnating.

To continue reading, please go to the original article at

https://www.sovereignman.com/trends/the-price-of-gold-just-hit-a-record-high-25562/

To your freedom & prosperity, Simon Black Founder, SovereignMan.com