The effects of the debt crisis are evident.
The growing mountain of debt has reached a level that is unsustainable as a whopping $7.6 trillion in interest-bearing US public debt will be maturing in 2025. That number represents 31% of all outstanding US government debt, which will most certainly add upward pressure on rates.
Even as the Federal Reserve lowers rates, the market is setting its own pricing. As borrowing costs rise, the debt market is sending a clear signal that there is an obvious loss of confidence in the Treasury’s ability to find enough buyers for the surge of fresh debt.
While the hedge funds and financial elites are attempting to control the market dynamics, the economic indicators, combined with the overwhelming debt burden and continued government spending, are leading us into what could be the greatest financial crisis our country has ever known.
With the exception of a handful of money managers, who I consider to be the perpetual cheerleaders for higher stock prices, most investors have a sense that something is about to break. They may not speak about it openly, for fear that their concern of a market crash may trigger the inevitable. However, as the cracks in the system become more obvious, the level of fear will continue to grow, to the point when investors eventually hit the panic button. We are getting close…very close.
I’ve said it before, I’ll say it again…The next market crash will be shocking.
Those who are without a plan will unfortunately suffer the greatest losses, however, those who are planning ahead, could very well make an absolute fortune. The good news is there’s still enough time for you to enhance your financial literacy.
Investment Strategies: What can investors do to hedge against a debt crisis?
Diversifying assets is critical during a financial crisis. Real assets like gold and silver, as well as agricultural commodities like cocoa, coffee and sugar, should be considered as hedges against a collapsing debt-based system. In my opinion, silver is one of the best tools for preserving wealth because demand for this precious metal is twofold. While many investors see silver as a safe place to park money as a hedge against inflation, the demand for silver rose by 7% in 2024, and is expected to outpace gold in the years ahead. According to the Silver Institute higher demand is also expected from the automotive sector and rapid adoption of AI technologies around the globe.
You might also want to explore more sophisticated option strategies, in the form of Diagonal Calendar Put Spreads. Do not let the option markets intimidate you. Yes, it will take a little time to learn how to incorporate such strategies, but you can start off with the most basic, and conservative, strategies and grow your positions as you become more familiar with spread trading. In a nutshell, Diagonal Calendar Put Spreads involve buying longer-term LEAP Puts on the long side while selling cheaper far out-of-the-money puts to help pay for the options on the long side of the spreads. This sets us up to profit when the markets eventually begin to move lower. If you would like to learn more about how this works, come visit us and we can introduce you to the basics. www.stickytrades.com
Below is a 5-year weekly chart of Silver (Ticker: /SI) with notes attached.
Notice the acceleration of the trend in 2024, due to the increased demand for the precious metal.
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