What can we do in the current economic situation which is, to say, very bad?

The fundamental indicators in my brain tell me that the economy is going down, but is it the case?

The Current situation

We seem to be in a situation where the entire world economy will depend upon the U.S. Economy again. As seen in the current political case between China and the U.S. and between Japan and Korea, international cooperation has deteriorated. Those things are usually strongly negative signs regarding the probability of coming depression. 

In 1929 due to the devastation of the First World War, almost the entire economy had to ask for financial help from the U.S. economy. In that era, the U.S. was the only substantial economic existence that could afford to help other countries. European countries were filled with debts from U.S. investors and the government. Amid that situation, European countries implied that without Germany’s paying Compensation stated in the Treaty of Versailles, European countries also do not pay back to the U.S. The fear and the anger of American citizens and investors came from the statement or attitudes that hindered international cooperation, which can be to blame for the lengthened period of the Great Depression in 1929 and possibly the cause of the disaster. Meanwhile, the U.S. financial system crashed in 1929, and the entire economy, which depended upon the U.S. financial market, also was devastated by the incident. 

Another example easily can be seen in financial history. In 2008, the world economy fully trusted the American housing market and invested in almost everything. The housing market crashed, and this affected the entire global market.

What can we hope for?

If there is any chance to turn the situation into a positive one, what would it be?

We can hope that the governments and the central banks will keep the economy rolling until the real economy comes up with the current bubble economy. There are inevitable and necessary demands for green technology, which is essential for humans to survive as a species on the earth for a more extended period.

However, I could say that it is easier to build the “green economy” by eliminating inefficient sectors and corporations from the economy by having an economic recession and rebuilding the economy with the ideas based on green technology.  

To return to the main topic, what should we do in the current situation?

We assume that the recession is inevitable, and there might be a bubble before experiencing an actual recession. If the assumption is valid, it is rational to buy Yen and Gold and sell short on indices or ETFs such as Nikkei 225 and S&P 500. I confirmed that Gold is no longer the best option because the prices of Gold have gone too high already. Buying Yen would be the best option I can consider.

Although I believe the contents of this article are accurate, it does not mean that I suggest that you should buy the things above. Nobody forces you to do some specific investment movement. Do anything at your own risk. Thank you very much.

It is apparent that investors worldwide think that the economy might be in a dangerous status.

Gold prices have continuously been going up, and the Yen value is also increasing.

The reason behind those movements stems from the uncertainty of the global economy.

Gold has been the best option to invest in because of two main factors. One is that inflation is possible because of monetary easing policies executed by the central banks in developed countries. The other is that under an unstable financial situation as we are experiencing, capital tends to be protected in case of economic recession. Gold is one of the options to safeguard money since Gold holds permanent value to some extent.

The Yen is also one of the safe assets.

A rise in the yen exchange rate partly indicates that investors are preparing to experience the subsequent depression.

The question is whether those acts mitigate the risk of the coming depression.

Gold is sucking money that could potentially benefit the sector that needs money. A strong yen suffocates the Japanese economy, which can eventually negatively influence other economies. On the other hand, investors can use money sucked by Gold to promote a capable economic existence when the next recession eliminates inefficient people and companies from the economy. The same goes for buying Yen. Therefore, I  can say that protecting capital by, for example, buying Gold and Yen is not more than the preparation for the coming Financial crisis.

At this point, it is rational to conclude again that financial recession is inevitable. Since the beginning of this year, I have reached the same conclusion, but it probably indicates that the decision reflects the truth.

Investment Strategy amendment 4th August 2019

Market updates

Rough review: Financial sector’s limitation is becoming apparent day by day.

More specifically, the Fluctuation of Gold prices and its strong support line tell us that investors worldwide think either inflation is coming or/and financial crisis is coming. Gold prices are moving in that way.

The Asian region is now unstable, and the EU has been problematic since a few years ago. U.S has been the only hope for us strictly like before the stock market crash in 1929 when the whole economy depended on the U.S economy in both her products and money.

Germany seemed fine until the world realized the critical problems of Deutsche Bank.

It seems like everything is ready to trigger the financial crisis, which is inevitable anyway, at some point.

What are we going to do now?

It might be a correct move to Sell short in Indices and buy gold after every correction.

Also, buying bonds is supposed to be recommended in theory. Still, the situation is perhaps different from something in a textbook because we have negative policy rates in some of our economies. What is more, bond prices may be already in the bubble.

Finally, considering the financial history and obvious things, the Yen might be an excellent option to buy in this current situation. The economy seems to be a fragile status than stable and secured.

Following up articles are coming soon. Thank you