The Michael Burry Gold Effect | The Economic Ninja

The Michael Burry gold effect. It’s probably going to go down in history about like that. And it’s not because Michael Burry was the first to understand what’s going on in the economy and understand the importance and the role that gold plays during a straight up unbelievable smackdown in the perception of 99% of investors out there. He wasn’t the first probably to move, obviously to move the gold officially, but he understands something that most investors do not and that is. It’s one thing to move into a recession and to make big gains. It’s another thing to go through an all-out collapse of an economic system.

That system being US dollar hegemony, hegemy, whatever you, however you pronounce it, and the shift of power economically from the western world to the BRICS nations. And in that understanding of the difference between recession and crashes, he understands that it’s not who makes the most, it’s whoever can hold on to the most value during a downturn in that cycle and then take whatever’s left in that value that he or she held on to and make massive gains while other people are crying and wailing in the streets and can’t make any moves because they can’t have access to credit.

People like Michael Burry are going to go and absolutely crush it. The story I want to read you is perfect. The first line, it’s out of moneywise.com and it’s entitled, big short investor Michael Burry just made a multi-million dollar bet on gold and dumped tech giants, Alphabet and Amazon. Three ways to add the yellow metal now. But here’s what’s great about this story. Michael Burry’s moves tend to make headlines. Now this is not only going to be great for the gold community and the understanding of the importance of owning physical gold somewhere, whether you have in your possession or like me, I have to vault it.

But I will tell you this, it’s going to also take silver and set it on fire. Why? Because when people like Michael Burry move into gold and they sell what everybody else is all excited about, Alphabet stock and Amazon stock and all this crap out there. And I say crap because think about it. This is what’s amazing too. You have Nvidia right now moving for a 10 for 1 stock split. Why? It’s a psychological thing that CEOs understand when it comes to managing stocks and your company share a performance is that when you split it up by 10 times, but the value is still there, right? The market capitalization, it’s all still the same, right? The day it splits.

However, because you can’t, people can only afford so much and what they want is rampant speculation in their stock and they want the most emotional type of stock investor that is and that is the retail investor. So what do they do? If they’ve got a stock, let’s say that’s $1,000 a share, they know that most poor people trying to act like rich people that don’t think like investors, they think like speculators can’t afford their $1,000 stock, but if they split up the shares, magnify them by 10X and now that share is immediately worth $100, nothing’s changed fundamentally that the emotional stock buyer will race in there and buy it up.

That’s exactly trust. I know so many CEOs of publicly traded companies and we have really interesting talks. That’s a whole another level of manipulation. That’s manipulating an investor’s mind. Honestly, it comes down to they’re not investors, they’re speculators. And so as everyone else is speculating over at the stock market and they think they’re making money because the Dow Jones and the S&P are making all-time highs, not understanding what happens during cycles of inflation in a country. They don’t understand that the stock market also rises because of an effect that’s made by investors that race in because they’re going, I’m losing money over here, so I’ve got to go get yield over there, meaning the stock market or the bond market, stuff like that.

But then also, it creates its own issue like a thunderstorm that creates its own wind patterns because it’s constantly trying to bring in new fresh air low to the ground, sucking up into the thunder cell, the energy and getting its own weather. It’s the same thing. When more and more people hear that the stock market’s moving up, they move in. Well, Michael Burry understands this concept very well. As a matter of fact, Michael, if you’re watching this, I do want to get together with you. We know someone in common that’s reaching out to you, so please let me know because I’d love to sit down with you and talk with you.

Or if you want to go on the channel, I’d love to interview you. The hedge fund manager famously bet against the US housing market in 2008 in one big, a move that was depicted in the hit movie, The Big Short, and now his investments are making headlines again. Real quick, hashtag gold if you own gold, hashtag silver if you own silver. Let’s see who owns more of what because this is going to be great for both metals because investors are watching Burry. Exchange commission Burry’s company, Scion Asset Management, has made quite a few adjustments to his portfolio in quarter one of 2024.

Among Burry’s notable moves were selling his stakes in Amazon and Alphabet and increasing his holdings of Chinese companies, JD.com and Alibaba. Burry, now think about that, moving money into knowing what company Alibaba, the companies that are tied to Asian nations that are building, they’re succeeding, they’re joining each other’s trade alliances. There’s so much going on over there. Burry also made a substantial bet on gold by purchasing 440,729 shares of Sprott’s physical gold trust, valued at 7.6 million at the end of Q1, making it the fifth largest position’s portfolio. The fifth largest position’s portfolio.

I want you to understand something. I’m going to make a call right now. Let’s see if I’m right or wrong. I’ll bet you next quarter Burry adds to his gold position. It’s not next quarter he’s going to do it. It would be that he’s adding to his gold position right now. That’s my bet. That’s what I believe. Type four, if you agree with that, that he’s not just making one bet, that he’s going to continue buying, and we’re going to see that in the next quarter’s results. And that’s what’s amazing. You have most of the nation thinking they’re investors and they’re going off of historical data.

They get to look at best three months into the past and see what Michael Burry did or Elon Musk did because of their filings or, well, heaven forbid, Nancy Pelosi or Congress. You know, they only have to pay a very small fine. I want to say it’s $80 if they do not disclose within a, what is it? I’m blanking out 21 day timeframe of what they bought and sold based on what they vote. They get to vote on the prosperity or the detriment or the destruction of companies, of indexes, all kinds of stuff.

And they get to actually trade based off of that information. And here you see people like Martha Stewart going to jail. Interesting. If you agree and believe that Congress, half of Congress or most of Congress should be locked in prison and given term limits, type 10. I mean, honestly, that’s really what we need. But I just want to see what you think. So it says a unique feature of the Sprott physical gold trust is that investors have the right to redeem their units for physical metals on a monthly basis, provided they meet the minimum redemption amount.

This requirement is quite substantial as a unit holder that you must have enough units to equate to one full size London good delivery bar, which is approximately 400 ounces. So that really does squeeze out for physical delivery 99.9% of the population. Okay. Now it says here, gold’s been on an extremely remarkable surge at the beginning of this year. The precious metal was trading at $2,062 per ounce today. It was $2,357 an ounce reflecting a 14% increase. To put this into perspective, gold is outpace the S&P 500, which gained 11.7% over the same period.

But I guarantee you Dave Ramsey will keep touting his S&P. It’s because he makes money based off of it. Hey, I make money selling courses and teaching people how economic cycles, real estate cycles, all that kind of stuff, and how to be successful, how to start businesses. So I sell a product. I don’t push something that I don’t teach people on. And that’s the sad thing. The truth is gold is out performing the S&P. And I believe that in the next 12 months, this is not financial advice, but I invest in gold, silver, Bitcoin, because I believe those three assets and I have other cryptocurrencies as well.

But my point being is that I believe that those asset classes will well outperform the stock market, even as the stock market keeps rising due to inflation. And really when it comes down to due to the fact that drone pal doesn’t have the cajons to really rise inflation, bring rates up high enough to actually quell inflation. But that’s just me. Type 11, if you understand this and you get it. And if you do, and again, type 10, if you think that Congress should be locked up and throw the key thrown away with term limits so that the next set doesn’t come in there.

That’s why everyone was typing 10, quite frankly. Look, I hope you got something out of this. I thank you so much for watching. You’re all amazing. And also some people were asking how there, where’s the link to sign up for the newsletter. So it’s down below. It’s in the comment section. If you want to sign up, it’s free, but we’re bringing people off platform and bringing them on to Zooms to talk about things that I don’t want to talk about here. And I hope you guys have a great day. The economic ninja is out.

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