Kyle Johnson
Lobo is in cash and looking for redemption. Do you care to tag along?
The Independent Speculator is now in 80% cash, a move that has drawn criticism from some and praise from others.
Lobo sees shades of 2011 and doesn’t want to make the same mistake twice:
To be honest, of all the mistakes I’ve made in my career, I think that not warning my readers more forcefully to brace for a gold correction in 2011 was the worst. I do remember writing that the blistering ride up to $1,900 was too much, too fast. I’m sure I never said gold had to keep rising to the $5,000–$10,000 figures some were predicting. But given all I knew was true about government money-printing and such, I did believe that any correction we saw then would be short-lived. I believed the arguments. I believed in my own cleverness.
I drank the Kool-Aid… and I’ll never forget the bitter taste.
Lobo now warns that a retreat below $3,000 would be unsurprising, even though this is not his base case.
And any significant sell-off would cause gold stocks to plummet—even if the companies remain highly profitable.
For Lobo, gold’s bull run from 2008 to 2011 began like it ended… with pain. Not because he and his readers missed out entirely, but they didn’t take full advantage. His readers emailed in anguish about not having any cash to buy more. Lobo missed significant upside for another reason:
I also painfully remember this from 2008. I put out a shopping list in the newsletter I wrote in December 2008, with "BEST BUY" in caps on a bunch of stocks. As I recall, all of them doubled within the next year, and their average gain by the top in 2011 was much higher. Back in December, I couldn’t be sure the bottom was in, I was just sure the stocks were stupid-cheap. Unfortunately, policy was that I couldn’t buy until giving readers a three-day start… so I contented myself with buying more gold, which had dropped below $800.
By the time I could buy the stocks I’d recommended, their prices were all up. Burned by so many dead-cat bounces, I waited. The stocks just kept going higher and higher. I had missed the bottom and never bought those stocks.
Lobo going to cash earlier this year might seem exceedingly cautious, but it’s a necessary step in the “buy low, sell high” process.
A lack of cash when the bottom is in could lead to missing out on life-changing profits. As Lobo explained in a recent interview, Rick Rule states that his greatest wealth-accumulation event began with opportunistic buying during the 2008 crash. Today, Lobo sees the potential to add another digit to his net worth.
As Lobo waits for opportunities in gold miners, his attention has turned to the oil patch.
There’s nothing I can write about the war in Iran and the closure of the Strait of Hormuz that you don’t already know. Mainstream media reports prove false and/or irrelevant within hours, sometimes minutes. By all appearances, multiple heads of state don’t have a full grasp of all the facts and circumstances.
Using mainstream media reports to predict what happens next in the oil market near term is always dangerous, but especially now.
Complicating the matter further, shortages are brewing that could send oil much, much higher.
On the other paw, geopolitical tensions could cool, and wars could end. But even if we assume traffic in the Strait of Hormuz returns to pre-war levels, it would still take months if not years to rebuild much of the infrastructure that has been damaged and destroyed.
Lobo lies in wait because the oil market is prone to overreaction. If the pattern holds, oil will fall lower than it “should” when peace breaks out, and then normalize higher.
This could be just the sort of opportunity to “buy low” that Lobo is keen to pounce on.
Lobo sees safety in uranium stocks.
In recent years, the general public has changed its tune on nuclear energy, with many “green energy” strongholds looking into building and/or restarting reactors.
The war in Iran has exposed the dangers of relying on fossil fuels. Disruptions to shipping lanes and supply chains have immediate and long-lasting consequences.
Citing the war, Ursula von der Leyen admitted that Europe’s move away from nuclear energy was a “strategic mistake.”
There is one simple and undeniable truth: Modern economies cannot grow without more baseload power.
Uranium’s energy density makes it possible for countries with no oil, coal, shale, or even suitable rivers to achieve energy independence.
But scary headlines on matters of no real consequence to nuclear energy can send spot uranium prices lower—and put related stocks on sale. The “deep seek moment” last year created just such an opportunity.
Lobo is looking for another irrelevancy like that to create great bargains.
Lobo is not predicting the next GFC. The odds seem low that we will even see a formally recognized recession; the books are cooked. But hyped-up, overbought markets can tumble without one.
I can’t promise which opportunities will come. But whichever one does, I suspect you’ll want to have plenty of cash on hand to take advantage of it. This is the point Lobo’s critics are missing.
What about you—how do you want to play the odds?
KJ
P.S. Learn when Lobo feels ready to deploy his cash into gold, silver, uranium, oil, copper, and more by subscribing to our free, no-hype, no-spam newsletter: The Digest.
