The "digital economy vs. the hands-on economy."
That's what the talking heads are now calling sugar daddy Jerome's (otherwise known as Fed Chairman Jerome Powell) "by any means necessary" approach to inflating the biggest asset bubble most of us will ever see.
In the real world, the debacle that is the U.S. handling of the COVID-19 virus is leading those in the real world to some all-too-real choices.
Schools are re-opening. Here near Austin, Texas, online learning was being mandated other than for religious or private schools. This week will be the first week parents get to decide to send their children to school or continue - if able - with the online option.
For parents who work, whose children were required to learn from home, child care costs make going to work an exercise in balance sheet management that can be overwhelming.
It's not just parents dealing with the fallout from the shift to the "digital economy."
Companies affected by the shutdown are experiencing real consequences. Consequences that continue to highlight the disconnect between the "digital economy vs. the hands-on economy."
When I first got started in the resource space, a mentor and friend asked if I wanted to hear a joke. He proceeded to ask me if I knew how to make a small fortune in the resource space. He then delivered the punchline, by starting with a large fortune.
I had neither a large or small fortune to lose and was not amused.
Despite the "everything is awesome" take to the major U.S. indices, in the real world, everything is not awesome.
Take Arena Energy LP, which has filed for bankruptcy and plans to sell most of its assets to PE firm Lime Rock Partners & management group in a deal that includes $64.2M in cash.
The Texas-based driller filed for Chapter 11 protection to restructure more than $1B in debt.
That's how you take a large fortune and turn it into a small fortune.
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An inflation target of up to 3% is now the official policy as the Fed tells us that 2% inflation has stayed out of reach but now they're committed to up to 3%.
Again in the real world, lumber is up over 160% since April.
In the gold space, many expect this recent consolidation in the gold price to continue lower. I'll take the other side of that but in the mid- to long-term, it won't matter.
For those skeptical of gold heading higher, consider that 80% of outstanding bonds globally (all of them) yield less than 1%.
It also helps that I have Treasury Secretary Steve Mnuchin and Fed Chairman Jerome Powell on my side as well.
Back to my friend with the jokes. Right after the joke about the small fortune he continued and explained that despite the inherent risk in resource speculating, I could do incredibly well with some hard work and especially if I hit the right cycle.
I believe we are in the early stages of a cycle that will be historic in more ways than one and, though I've had an incredible couple of months, the fun is just getting started.
To your wealth,
Gerardo Del RealEditor, Junior Mining Monthly and Junior Mining Trader.
For the past decade, Gerardo Del Real has worked behind-the-scenes providing research, due diligence and advice to large institutional players, fund managers, newsletter writers and some of the most active high net worth investors in the resource space. Now, he is bringing his extensive experience to the public through Outsider Club, Junior Mining Monthly, and Junior Mining Trader. For more about Gerardo, check out his editor page.