A historic moment happened recently that was one of the defining moments for President Trump, the signing of the tax bill titled: The Tax Cuts and Jobs Act. The bill was the most significant legislative victory for President Trump. The Tax Cuts and Jobs Act will raise $4 trillion in revenue to help offset tax cuts by closing the door on dozens of corporate accounting tricks. Washington isn’t spared either, as Members of Congress will no longer be able to deduct their living expenses. It provides $5.5 Trillion in tax cuts with a net result in deficit spending of $1.5 trillion which will be added to the national debt.
Thoughts on the Tax Cuts and Jobs Act
The Republican philosophy is that the Tax Cuts and Jobs Act will spur job growth in wages and the amount of quality jobs being created. That in turn will escalate personal spending, lower unemployment and therefore add more revenue to the Treasury. I am a Trump supporter and I like a tax cut. Unfortunately, it looks like we are completely ignoring our fiscal responsibility. The Republican Tax cut will add significantly to U.S. debt in the next decade according to Fitch Ratings and many others. Many agencies say the GOP cuts will not pay for themselves through growth. Under President Reagan Tax plan it spurred huge economic and job growth. During Reagan’s administration, whom I respect greatly, our country’s national debt escalated up 400%. When President Reagan left office our debt to GDP was at 36% while currently we are at 106% debt to GDP. History has shown that this plan will be great for American in the short term, but we are putting all the debt obligations upon our children and their children. That verbiage you don’t hear much of recently, yet it was the main message of the Republicans during the Obama administration when our national debt was $7-$8 trillion less than today. In the Senate, Sen. Rand Paul(R-Ky.), a fierce advocate for lower federal spending, accused his fellow Republicans of reneging on calls to cut spending and force a separate vote on the waiver. A measure waiving mandatory cuts to entitlement programs forced by the passage of the tax bill. “We have a spending problem. We have rules to keep spending in check and we disobey our own rules.” The waiver passed 91 to 8, averting the mandatory cuts.
Market Cycles and Corrections
The S & P 500 is up 18% this year and has had a 9-month consecutive winning streak, the longest in history since 1983. To say this will continue at these extraordinary high double digit returns would be disengaged from reality of how markets operate. The 50-year average is a 7% increase in markets per year. Some are already saying “But this time it is different”. I heard the same thing in 2000 with the dot.com bubble craze. We were being told this is the new norm, only to find out soon that belief was financially devastating. I heard the same in 2007, while the outcome in 2008 shook the belief that this market isn’t going to correct, there is much more upside before a correction. Well that time wasn’t any different than 2000 and now isn’t any different. All markets correct when they become overvalued once that market gets spooked. This time it will be the same. Will it be in 2018? If I knew that answer I could then tell you if Bitcoin will crash and lose 90% of it’s worth or will it become worth over $60,000, or four times as much as it is currently. A prediction the largest holders in Bitcoin made recently. Nobody knows any of these answers yet history tells us quite clearly. When markets have moved as much as they have over almost a nine-year span, with sentiment as high as it is, these are the underlying tones that scream market correction is near. The longer the wait the deeper the correction. Coming soon in January, a white paper will be released that I am currently writing. The topics will include:
- Seasons of market corrections, and how does gold react during those times.
- Will our debt drag down the value of the Dollar as foreign central banks continue to sell our Dollar?
- Quotes from well-respected billionaires warning of a severe market correction.
- What might be the catalyst to trigger a market correction.
Year End Discount
If an investor wanted to “time the market” to be able to get the best price outside of the normal market fluctuations, then that happens once a year. We are now in this environment. During my time in the precious metals industry I have seen a year end discount 22 out of the last 25 years. What generates this is an inventory tax. Wholesalers are people just like you and I, they try to avoid having to pay excess taxes. They would rather discount their inventory and create a positive cash flow going into the New Year, rather than have a larger tax liability. I have seen the discount start the first week in December and last until mid to the end of January. I have also seen it last only a few days between Christmas and New Year’s. The discounts are sometimes only 2-3% and sometimes as large as 28-30%. After the discount time ends then historically everything adjusts as if there wasn’t a discount to be taken advantage of. The products that get discounted varies from hour to hour, and day to day. Availability is changing rapidly as getting “those deals” is at times fast pace. There is no way of knowing what products will come available, at what price, and when. As wholesalers go through their inventory they release lists daily and sometimes multiple within the hour.
If you have thought about either starting to invest in Gold and Silver, or adding to your portfolio, then your timing is excellent. I would suggest you call one of my representatives and get some detailed education on the various markets and then if you want to move forward you now have a strategy that is tailored to you. Time is now running out to take advantage of this discount. I know it will be for the rest or the year and possibly the first week in January of 2018. If we are lucky then at most the second week in January will still have some discounting going on until inventories of the discounted items are gone.
So far this month we have already seen some nice discounts and many investors have taken advantage of them. Their gut, (I call it my spirit) is speaking to them to get more gold and silver in their portfolio. If this speaks to you then you should also make a call today to one of our representatives. They will learn why you are looking into precious metals, educate you on the different types of markets, and develop a plan to compliment your existing portfolio.