George Gammon LIVE STREAM Q&A Summary | July 5, 2020
Here's the summary and highlights from Rebel Capitalist's latest live Q&A
These are my interpretations (summaries) of the questions and answers of the July 5 2020 episode.
Each question is time stamped so you can watch the video and hear more.
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George started out the livestream by saying he finally booked a flight to get out of Colombia and to the Caribbean on a humanitarian flight. He’s not quite sure where he’s going to go in the Caribbean yet…
5:45
Emily: It would be great if you could talk about option trading, security calling and other ways to protect your investment.
George: Check out the 6 videos I with Patrick Ceresna. Four of them on options and two of them on building a Dragon Porfolio. He’s so much better than me, I’m just scratching the service and Patrick is an expert.
8:00
walkwithjosh: Do I think a March crash will happen again?
George: I don’t know that a crash will happen, but doesn’t mean I don’t think we are in or will go to a bear market. Things may just grind slower. The second wave of the virus has not yet been priced into the market. They just see a V-shaped recovery…we’ve got a long way to go with this thing. YOu’ve got to look at the behavioral patterns with human beings and what their doing and factor that into your base case for what you are going to do with your portfolio. That’s the main reason i’m leaving Colombia…I’ve got a great infrastructure here in Colombia but the next 6 months are completely unknown. What’s going to happen in the US? 2020 has been such an insane year i’m just trying to get away form it all and reset and figure out what the game plan is and get more mobility.
10:40
Raymond: Can you explain someone who is receiving unemployment on where they should start and when it comes to growing wealth instead of keeping it in the bank
George: Saving in a bank is not too bad actually. You’re in no jeopardy of surpassing the FDIC insurance on losing funds. If I was in that position, I would focus on education. I taught myself on Youtube. We’ve got podcast and the Rebel Capitalist Show. I don’t like Dave Ramsey because he was hard on Peter Schiff’s dad and ever since then he’s rubbed me the wrong way. What he says about no consumer debt is just smart and common sense. Start there and start listening to Miles Beckler because he gives all of his content out for free, he’s an entrepreneur has actually don’t it. So first I would educate myself, the second thing I would do is save, then save around $5,000 and start an online business.
13:30
Jay: What are your thoughts on long-short funds to play Long Volatility?
George: I’m concerned you’ve got a negative carry most likely on the long. On the short you have a positive carry. I just don’t like those funds. The negative carry defeats the purpose. The point of Chris Coles paper is long volatility forever. I would go back and listen to Patrick’s video.
16:10
Christopher: If rates go negative will USD lose world reserve currency status?
George: Mmm not neccesarily. It depends on how negative compared to Japan and Europe. You would have a lot of capital flight out of USA and dollar negative mostly. But no, it would not just lose status.
17:30
Stacy: Why Medellin and not Bogota? Is it strictly the for the RE market that is there?
George: When I first came here in 2015 Medellin was a lot cheaper than Bogota. Also from the standpoint of historic values. That’s what brought me here originally. Plus Medellin is gorgeous. Bogota is busy and I don’t really like it. if you value good weather than you’re gonna love Medellin. It’s perfect it’s the “value of eternal spring”> if you like 80 degree days and 60 degree nights you’re gonna love it. RE was cheaper and personal decision.
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19:00
Tyler: Why not buy Canadian RE? I know it’s not cheap but wouldn’t it be around the same price as rent?
George: No, not even close. It’s not cheap so don’t buy it! When you got a RV ratio getting below .7 or .6 if you do the math its cheaper to rent. What are the RV ratios in Vancouver? .1? TERRIBLE. Cheaper to rent buddy.
20:25
John: Things in the US are getting really bad, can you do a video going over the steps on becoming an expat?
George: It’s pretty simple. Just pack your bags and peace out. HAHA. That’s pretty much what I do. [He then tells a story about his apartment being robbed and ransacked. They took all his valuables. Now he won’t buy more than what he can put in 5 large suitcases.]
What I would do is go there and spend time first for a couple weeks or months. Start a watch list just like stocks. When you can get there take 2 weeks and try then out…
26:50
Ike: Will communism / facism take over the US?
George: Depends how you define facism. I think there’s an argument from an economic standpoint, not really the racial component, I don’t know how you can argue how we don’t fall under that category already with the bail outs, stimulus packages, laws and regs on businesses, how can you argue we don’t have something where private has ownership but gov controls everything? [he talked about the proper mandate of the federal reserve really was. It’s nothing today what it was made to be…]. It may turn into Weimar. But it depends how you define hyperinflation. I have us seeing potential 1970s consumer price inflation. You will see price inflation over the next year that will really create a lot of pain for the avg person.
31:50
Would it be best for the world economies to work together? Game theory, infinite games, and universal currencies…
George: Yes, im right along with Friedman. Just free markets and open economic borders. I’m totally down with that…50% of entire US economy its gov spending! If you work the math, you can’t squeeze the private sector enough to extract enough taxes to change directions and handle the debt and make it sustainable…
[trade discussion ensues with other commenters on this topic…]
41:10
Christian: How do you see the Colombian Peso vs USD
George: Start with oil. Because the Colombian peso is loosely correlated with oil. If you think oil is going higher, then I would be bullish on the peso. It’s very very cheap right now. The downside to the peso is the oil reserves are limited. But they are expanding and diversifying the economy. So is the peso going to be higher or lower in 5 years? I’d say it’s going to appreciate. it’s 3600 now, in 5 years I would be surprised if its under 3000.
42:00
Ross: what are your top US rental markets for investments?
George: Linear markets. I like Kansas City but that’s bc I know it so well. I like Blue Springs and Lee Summit on the Missouri side is more land lord friendly. As far as others I would defer that to Jason Hartman. he’s the expert on linear markets. www.jasonhartman.com and look at the markets he’s doing business in right now and those are the markets I would get into bc Jason’s already done the homework on the areas.
44:25
Rain: Do you think we will get Basic Income and what will the consequences be?
George: Simple. Yes and we will get consumer price inflation.
45:30
Brendan: What is the best hedge against CPI?
George: Gold at 10% of my portfolio as insurance. Hard assets and ideally 30-year fixed rate mortgage on property creating positive cash flow. A step further I would diversify my portfolio from currency and political risk.
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46:35
Stay Curios: Do you think we will go back to the gold standard
George: probably. I’d give it a 70-70% chance. I would say it above 50/50 within the next 20 years.
47:30
EB: Buy a home with savings or mortgage?
George: do it with a 30 year mortgage. You’re getting paid to short the dollar with these rates.
47:50
What would it take to go to negative interest rates?
George: #1 you’d have to see another shock to stock market. Then the Fed steps in to try and boost the market by talking it up bc that’s really all they can do. they would buy equities. more stimulus. If the fiscal stimulus and Fed QE did not stop the market from going down, and RE started going down, and unemployment rate up, I think that’s when they get into negative interest rates. I think it’s going to be the nuclear option with the Fed. It has a lot of ramifications. I don’t think the Fed wants to go there if they have the choice.
49:20
Do you think there will be a war with the US over Taiwan?
George: I’m not sure about Taiwan but I think the way things are going in US and China I would not be surprised.
50:15
Do you believe there’s manipulation in the gold market with derivatives?
George: there might be but I don’t put much though into it bc me personally does not matter, I just like to buy 10% physical gold.
51:20
Do you think the gold price could fall again if the monetary policy works like in 2009?
George: not monetary more like repo markets, liquidity issues, balance sheet capacity of financially institutes and the plumbing of financial systems. I don’t know if your going to see a big price drop like in 08, we’ve already seen it. It would surprise me but its possible…
53:00
Brandon: Can you recommend a good newsletter focusing on gold miners?
George: Chris Macintosh does that in Rebel Capitalist Pro. Capitalist Insider newsletter may be good and Merin’s newsletter. Those are the two i’ve read in the past.
54:05
Do you think the Fed will crash the dollar in order to bring in a world crypto currency that will save us from hyperinflation?
George: It’s a weird way to phrase that bc if they are crashing the dollar that could be from hyperinflation. I don’t think they want to crash the dollar bc they want to retain leverage with the swap lines. I don’t think they will like it if it goes up to 110 or 120. I think what they’ll do is the UBI and helicopter money. When they did stimulus checks it was difficult to get the checks out. I think they will move to an app type system and send you the money directly. Then they may transition to a fed based / gov based crypto currency. That’s what I see playing out.
55:55
What portfolio assets allocation do you recommend?
George: 10% physical gold, 80% investments that pay you to own them, and 10% speculation. You’re trying to buy stuff cheap, gold side I just buy stuff regardless. If you want to get more sophisticated, look at the Dragon Portfolio.
57:00
Shane: what do you think will play out in US socially and economically in the next 6 months?
George: I don’t see it getting better, I see it getting far worse in the US. Hopefully I’m wrong. If I had to be in the US I definitely want to be in a Republican state. Not bc I like them but bc I think there will be less rioting, looting in a GOP state. Florida is a decent place to go and you have access to the water so you’re not too restricted. IF you have resource you can get a boat and say ‘i’m out’. ‘
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59:20
Are you still buying PHYS?
George: I am but just bc I can’t get physical gold. To be clear I am buying PHYS bc the reproach i’ve done I like a heck of a lot better than GLD and I want the underlying asset (gold) and I trust Rick Rule. They hold their gold in the Canadian Mint (custodian). But to be clear I prefer physical gold.
1:01:00
Mark asks if it’s better to wait to buy gold mining shares in case the stock market crashes?
George: You should not be asking if it crashes or goes up should I do this. No, if you do that long term you will lose money that way. You should be asking yourself are the gold miners cheap right now. If they are cheap BUY THEM. I don’t care if the market crashes. If it crashes, buy more. If you can’t buy more bc the market crashed it’s because you really did not buy cheap! If they are cheap, buy them regardless if you think the market is going up or down. If you do this long term the probability is on your side and you’re gonna come out ahead.
1:05:27
How do you know if something is cheap?
George: It’s a lot easier to do with a commodity bc you can just look at a chart going back 100 years adjusted for inflation. I focus on commodities bc they are at a historic low compared to equities. Oil is an example currently. I can’t play oil directly, so how do I go long oil? You can buy oil company stocks.
[goes on to talk about his Colombian real estate and Colombian peso. Says he is going to continue to do Colombian RE and eventually consider selling those assets when they are high to another asset that is cheaper to get a better ROI…]
1:08:50
Question on the TGA. How could the TGA (Treasury General Account) be used to increase assets prices like equities this year?
George: They’ve got 1.6 Trillion in the TGA. IF they spend that into the economy, that creates additional bank reserves. Just like QE. The difference is that if the Fed does QE, that only creates bank reserves. And the commercial bank has to take action for the bank reserves to turn into M2 money supply to increase money supply. If the treasury spends the 1.6 trillion it immediately does both: increase bank reserves and increase the deposits into the real economy and increase M2 immediately. Its a direct transfer mechanism circumventing banking system. QE3 was 80 billion / month. SO if you think about what that would do to the M2 money supply and bank reserves. If the treasury spent 1 trillion in a month, that’s mind BLOWING numbers even for what we’ve seen in 2020. That’s just astronomical. IMO you would see consumer prices like on food go thru the roof. but with all the additional money in bank accounts they could go right into the stock market using robin hood accounts. We know what ppl did before. The majority of ppl who made $35K to $70K used most of their money to buy stocks like bankrupt Hertz and any of these others. And that was with a lesser mount over a longer period of time. If they did a massive sugar rush of a trillion, who knows what could happen to the stock market. You could easily go back up to 30K based on zero fundamentals. That’s is to say you should not buy the market because it’s not cheap. Just bc the market may go up or down doesn’t mean you buy or sell stocks or commodities or gold or anything like that.
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