With the massive downturn in cryptocurrency prices and the collapse of cryptocurrency exchange FTX, the term “crypto winter” is now making headlines.
But Peter Schiff, CEO and chief global strategist at Euro Pacific Capital, doesn’t think that’s an accurate term to describe the situation.
“This is not a #crypto winter. It means spring is coming. This is also not a crypto ice age, even that ended after 2 million years,” he wrote in the tweet. “This is crypto-extinction.”
This is a dire warning. But it’s not the first time Chef has sounded the alarm.
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Last year, when bitcoin reached $50,000 and the bullish momentum seemed unstoppable, he said, “While a temporary move to $100,000 is possible, a permanent move to zero is inevitable.”
If you share the same opinion, you will probably want to know where Chef finds refuge in this ugly market.
Since Euro Pacific Asset Management recently released a 13F – a report that institutional investment managers submit quarterly to disclose their holdings – let’s take a look at some of the salient themes in Schiff’s portfolio.
Schiff has always been a fan of yellow metal.
He once said, “The problem with the dollar is that it has no intrinsic value.” “Gold will store its value, and you will always be able to buy more food with your gold.”
In fact, when Schiff tweeted about the extinction of cryptocurrency, he also mentioned that gold will “rise again to lead a new breed of asset-backed cryptocurrency.”
As usual, he puts his money where his mouth is.
As of September 30, Euro Pacific Asset Management owned 1.655 million shares of Barrick Gold (GOLD), 431,952 shares of Agnico Eagle Mines (AEM), and 317,495 shares of Newmont (NEM).
In fact, Barrick was the company’s largest holding, accounting for 6.8% of its portfolio. Agnico and Newmont were the third and sixth largest holdings, respectively.
Gold cannot be printed out of thin air like fiat money, and its safe-haven status means that demand typically increases during times of uncertainty.
If gold prices rise, miners such as Newmont, Barrick and Agnico are likely to enjoy greater profits.
Recessionary income stock
Dividend stocks offer investors a great way to earn a passive income stream, but some of them can also be used as a hedge against downturns.
Case in point: Euro Pacific’s second largest holding is cigarette giant British American (BTI), accounting for 5.3% of the portfolio.
The maker of Kent and Dunhill cigarettes pays a quarterly dividend of 74 cents per share, giving the stock an attractive annualized yield of 7.6%.
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Schiff’s fund also owns more than 157,766 shares in Philip Morris International (PM), another tobacco king with a dividend yield of 5.4%. The Marlboro cigarette producer is the seventh largest holding in the Euro Pacific region with a portfolio weight of 3.5%.
Cigarette demand is highly inelastic, which means that large price changes lead to only small changes in demand – and that demand is largely immune to economic shocks.
If you’re comfortable investing in so-called sin stocks, British American and Philip Morris might be worth looking a little further.
When it comes to playing defense, there is one slump-proof sector that shouldn’t be overlooked: farming.
it is easy. Whatever happens, people still need to eat.
Schiff doesn’t talk about agriculture as much as precious metals, but Euro Pacific owns 124,818 shares of the fertilizer company Nutrien (NTR).
As one of the world’s largest providers of crop inputs and services, Nutrien holds a strong position even if the economy enters a major downturn. In the first nine months of 2022, the company posted a record net profit of $6.6 billion.
Nutrien shares are up about 3% in 2022, in stark contrast to the S&P 500’s double-digit year-to-date decline.
Given the uncertainty facing the US economy, investing in agriculture can give risk-averse investors peace of mind.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
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