Dollar devaluation strategy: positioning for the wealth transfer

0:00If you hold a 401k, a savings account, bonds or cash, shares, ETFs, what I'm about to reveal to you could mean the difference between preserving that wealth through the biggest monetary shift in 50 years or watching the value of it get silently destroyed while most investors completely miss what's happening. President Trump was just asked about the dollar falling to a 4-year low, down 11% in just a year. And his response: dollars, dollar is doing great.

0:32Now, while most people scrolled past this headline, what they missed is literally the single biggest investment signal of the year. This deliberate dollar devaluation is transferring trillions in wealth from one asset class to another. And if you're positioned wrong, you're going to be on the losing side of this. My promise to you is that by the end of this video, you understand the process. You understand what's most likely to happen so you can position yourself better.

0:58This is not fearmongering. This isn't dooming and glooming as much fun as that could be. This is actually to give you the knowledge and the skills and to give you the training you need to understand what's going on here. My name is Felix. I'm a former investment banker and economist. That's Winston back there, who's clearly the brains behind it all.

1:17And we're also the founder of the Goat Academy. We've taught well over 20,000 students. We've also co-founded TradeVision.io where we make news and data that's institutional level available to you. None of that mainstream fearmongering nonsense out there.

1:34And for this video, we've gone through Fed data, institutional trading data, historical monetary policy precedents. We come back to pre-Nixon with of course the help of Winston's very large nose to sniff it all out and we're going to break down 3 critical things for you. First, America's debt trap and why it can't be solved. Second, the secret wealth transfer happening right now from cash holders to asset owners. And third, exactly which asset class is positioned as the modern safe haven. And it's actually not what most people think.

2:06So, by the end of this video, you'll understand exactly how to protect and potentially grow your wealth while most investors are going to get slaughtered. Sorry, but it's true. Okay, let's just get us all up to the same base level of understanding of a couple of numbers. America's national debt is $38 trillion plus, $100,000 plus for every single American man, woman, and possibly golden retriever.

2:32So, for the American average household, that is $266,000 because apparently you live in families of 2.3. I don't know what the 0.3 is. Maybe it's a very small person. Maybe the golden retriever counts. Maybe it's 3 cats. You let me know in the comments.

2:48But what makes it worse is that the US debt to GDP ratio. Now, to put that into household terms, imagine your annual salary is $100,000, but you owe $126,000 on a credit card. Now, the US government's a little bit bigger than that. So, they pay $3.3 billion every single day in interest that could fund infrastructure, education, healthcare. Instead, it's vanishing into the pockets of, well, the wealthy.

3:21Now, you might be thinking I'm exaggerating the severity of this currency crisis. But no, don't take my word for it. Listen to what the man himself, Warren the Buffett, the world's greatest investor, has to say about this exact issue. So, there you are from the Oracle himself, the natural cause of government is to make the currency worth less over time. It's not a conspiracy theory. It's the reality of the world we live in. And it's exactly why asset positioning matters now more than ever.

3:53So let me show you the historical patterns because this isn't the first time a major power has faced this situation. In 1971, President Nixon faced a very similar crisis. Bloody foreign countries were demanding their gold for their dollars. Imagine the cheek, right? They should have just trusted the Americans, shouldn't they? And the US was running out of gold.

4:11So on August 15th, 1971, mark this day, it's important. Nixon did something fairly radical. He ended the gold standard. He said it was temporary. That's a funny word, isn't it? It's like inflation is transitory. People believe this stuff apparently 55 years ago. So it's been temporarily ungolden standard for 55 years.

4:36So what happened next? Well, the dollar lost 87% of its purchasing power. 87% just from 71 until today. So if you held cash, your cash would now be worth 12% of what it was. Now if you held assets, stocks, gold, real estate, you won.

4:54And then we got in 1985 something that's called the Plaza Accord, you might hear that phrase thrown around quite a bit. The G5 nations, the big 5, agreed to deliberately weaken the dollar to fix the trade deficit. Now, it worked. The dollar fell but Japan got crushed. Sorry Japanese friends. That was American arranged in my humble opinion. Their currency appreciated so fast it created a massive bubble and then they got their lost decades of economic stagnation.

5:28So when major powers faced debt crisis they devalue their own currency. Basically it's inflation by design. It's the same playbook that we're running right now once again under this president. And the reason it's simple, it's irresistible for politicians.

5:45So yes, you can print money and they are printing money. They're printing a lot of money and it's going to cause inflation. Not hyperinflation, but significant inflation. You could cut spending. Nobody wants to do that. It's just unpopular. And if you're a politician, you're by the nature of the beast a person who needs popularity. Therefore, you will do the popular thing. Cutting things rarely is. See what Elon tried to do, right? Didn't work out very well, did it?

6:13And you could default on the debt. Well, if you do that, it's all over. So, nobody wants to do that. So, what's the real solution? There is only one path that actually makes sense. It's a controlled devaluation of the dollar through inflation. You make the debt smaller by making the dollar worth less.

6:30So if you owe somebody $100 and there are only $100 in the world, that's a lot of money. If you owe somebody $100 and there are $1 million in the world, it's a small amount of money. It's the same sort of principle. So what happens? Well, asset prices go up, but the debt stays the same number. And that's what Trump meant by I think it's great.

6:50Now before I show you exactly how this wealth transfer works and which stocks are positioned as safe havens here and which industries and which sectors, I want to give you something more in depth for those of you who are ready to actually learn. And that is Wall Street essentially moves a lot of money around. They move it from one industry to another, from gold to silver to tech stocks to biotech to AI, whatever. And all in my humble opinion you actually got to do is follow that money trail.

7:22And they're big footsteps. They're like elephant footsteps because the amount of money is so large. And once you know how to look for that and where to look for that, I think things can look very very different. And your system for investing in selection of stocks becomes very very different. So if you want to learn that skill, which is what I learned from my Wall Street mentors, then there's a short video I recorded for you. It's like 17 minutes long. I think you can get that at felix.org/getfree. So I put a link down below to that and that's for you guys who are a bit more serious about managing your money.

7:53Now let me show you the wealth transfer mechanism that's happening right now. It's already started. When the dollar declines by 11% in a year, here's what actually happens. Say you have $100,000 in savings. You just lost $11,000. Your salary buys $11,000 less if it's $100,000. That's how severe that is. You hold bonds. Well, they pay interest in dollars that are worth less. It's a hidden tax on people who essentially own cash.

8:24Now, the winners are those who own stocks because yes, your stocks are priced in dollars. So, when the dollars go down in value, the stock prices in dollar terms rise. Your real estate is worth more in dollar terms. Your gold and silver surge to all-time highs like we're seeing and your assets go up while your dollar debt stays the same. So, it's also good for people with a lot of debt.

8:49And this is why Ray Dalio said if you depreciate the money, it makes everything look like it's going up. So, the market isn't booming because the economy is great. It's booming because the dollar is dying. And Warren Buffett warned about this. The natural cause of government is to make the currency worth less over time.

9:09So right now if you're in cash or those low yielding safe bonds, you're being impoverished and it's the plan. If you're in the right assets, you're being enriched. That is also the plan. It is done by design. Maybe you think it's incredibly unfair or whatever. Politics don't really matter. What matters is how much money you've got at the end of it or how much the money is worth. Does that make any sense?

9:32All right. So here's where it gets interesting. When people say safe haven assets, most people think gold, government bonds, cash, and these are the traditional playbook, but we are in a new era. And there is a new asset class that combines, in my opinion, safety with growth. Now, of course, all investments carry risk and past performance isn't guarantee of future performance. I'm not a financial adviser registered for anything except with Winston.

10:01But large cap US tech stocks with global revenue are extraordinary. And by the way, I'm also a big fan of metals right now, especially gold. Silver is going to be very volatile, but yeah, a lot of money to be made there potentially. But I do think there is something everybody's overlooking and it is the big tech stock. Why? When the dollar weakens, companies like Microsoft, Apple, Nvidia, Google, well, they sell their products

10:28Globally in foreign money. So if they sell their product in a foreign currency and then they convert those euros, yens, pounds, all the monkey currencies back into the mighty dollar, they get more dollars for it. So weak dollar means bigger international sales.

10:45So think about it this way. Microsoft's cloud business called Azure just hit $50 billion in quarterly revenue. Much of that is from overseas, about 40-odd per cent or so, almost half. Nvidia's chips are sold globally. So when the dollar falls 11%, their foreign revenue is worth 11% more. So they get growth without doing anything at all.

11:10And secondly, this is not the dot-com bubble. That's when I started investing. That was speculation on future profits that nobody had thought about yet. Those dot-com companies usually had no revenue and certainly no profits. Today's tech giants are generating massive free cash flow right now. Microsoft Azure is driving AI revenue explosions on a daily basis and Nvidia is driving massive improvements in profits.

11:41So the tech sector has just given us a record number of positive earnings guidance for the year. So we're getting into the monetisation phase of AI. Yes, we've spent all the money on infrastructure and chips and technology, but companies are now making huge margins on AI services. And that's what I said about a year ago. I said software is the next step of AI.

12:05And the beautiful thing is that these companies are not tied to any single government's policy. They operate globally. They generate cash globally. They hold assets globally. So when the US government devalues the dollar, Microsoft doesn't lose value. It actually gains value.

12:20So it's like owning a business that operates in 50 currencies. Your dollar exposure is limited. And even if inflation really really takes hold of the US and the world, well, Microsoft is just going to put up their prices for their subscriptions. You probably wouldn't even notice. Companies are not going to cancel their Windows licence fees, right, because the company would stop. They're not going to cut off their cloud computing because everything will stop.

12:47So they're just going to pay more. So these companies have pricing power, the kind of pricing power that was reserved once for a Coca-Cola who makes a nearly addictive beverage. Pepsi for example raised during Covid, they raised their prices 17% in a year. Did they sell less? No, didn't. Why? Because people are addicted to stuff. I need my sugar, whatever it is.

13:12So when you have these very strong companies with products that once you sign up for them, well, you just need that, the pain of switching is just too great. You're going to pay whatever it is. And the data proves it. While the dollar is down last year, the NASDAQ, oh, this is silver.

13:32Silver went up quite a bit too, by the way. We should not fail to mention that. But let me just measure here in Trade Vision how much it's gone up, by 20-plus per cent. So it has done better than the loss of value of the dollar. Dollar goes down 11%, NASDAQ goes up 20%. So we're still making more money than the dollar devaluation.

13:56The silver thing is actually an interesting story. But let me show you gold for a second as well, which had a tremendous one. But let me show you something even more interesting because I was looking at this yesterday. I was doing a podcast. And what I was seeing is I was looking at the gold and silver dark pool trades. And you can look at this in Trade Vision. I'll put the link down below into a trial software we make.

14:22And I can see trades that are hundreds of millions of dollars. And they place them every single day, not just one day. The day before was the same story. And these trades have pretty low probabilities of actually making money. Go back another day. Here you have some more. $200 million, $100 million. And look, they have a 28%, 28%, 20% chance of making money. So these are massive institutional bullish trades on gold.

14:52Now on silver, the largest trade I can find is about $10 million, which is not a lot by Wall Street standards. So it does show you where the money is flowing. And I just thought I'd share that with you as you can obviously come to your own conclusion and rummage around the data on your own.

15:05So what's our strategy here? Let's get specific. What should you own? What should you avoid in this dollar death spiral decline? By the way, people are still going to use the dollar. It's just going to be worth less.

15:19Well, large cap US tech stocks. Think Microsoft, Apple, Nvidia, Amazon, Google. International revenue. They benefit from a weak dollar. AI monetisation is driving earnings. They have high free cash flow and it gives you international exposure without having to rummage around the exotic stock exchanges of Delhi or Kolkata or Indonesia or somewhere. Not judging those markets. I just don't know anything about them nor do you I imagine.

15:47And that's how I would get my international exposure. So no, I would not go to the apparatchik in Europe, the socialist republics of France and Germany or any of those and particularly hunt for those stocks unless you're into warmongering stocks, which has been a very good trade. War is always very profitable and insanely immoral.

16:06But with very few exceptions, most good companies are listed in the US. There's a very simple reason for that. If you're a brilliant business, you want to sell your business as the owner to the people who offer the most money and are going to pay you the most. Where is that going to happen? It's going to happen in the biggest stock exchange in the world where the biggest hedge funds, the biggest pension funds, the biggest privately owned banks in the world are. So where is that? Well, that is a place called New York. So everybody who's half decent lists there. There are a few exceptions, but they're not that many.

16:38So that's how I get my international exposure. Just don't bother with it, just buy the big tech stocks. And the third part to it, and the second and the first I appreciate are basically the same, keep life simple I always say, is precious metals. People talk about allocation, some people say 5%, some people say 25%, some people say 125%. Don't leverage, far too risky.

17:01But real assets is something that you can't print. So precious metals, you can't print gold as a central bank. You also can't print Microsoft shares. In fact, the exact opposite is happening. The number of shares of a company like Microsoft, here's a chart for it, it declines. So they used to have 8.5 billion shares outstanding in 2012 and now it's 7.5 billion. It's less every single quarter.

17:28How does that happen? They basically take shares and they put them in the shredder. So companies buy their own stock. Why do they do that? It helps to pump the stock price because their management is paid in share options and those share options are worth a heck of a lot more if the stock price gets pumped. So this is what these companies do. They keep doing exactly that.

17:48And you'll see the same story with every major tech stock out there. Like Amazon here for example does the opposite. Okay, I'm surprised by that because they do do major share buybacks but I guess they must be handing out a heck of a lot of share options. Let's look at some of the other ones then. Nvidia for example, again they had 25, 26 billion shares, now it's 24 billion shares. So there's a constant erosion of shares over time and that makes it a scarce asset, a little bit like what the Bitcoin lot tell you. Dig at the Bitcoin lot, go nuts in the comments down below.

18:26So what do we want to avoid? Well, anything with fixed returns in dollars. So you ever buy a long-term bond that pays you 4.5% for the next 30 years, run, right? If you were one of the muppets who bought the Austrian 100-year bond that paid you I think 0.5% or 1%, you deserve your head examined. And if you're sitting on cash because you think the market's too high and you don't know whether it's right to buy yet, I'm going to wait for the next crash, well, you're losing 11% per year, guaranteed, right?

19:01So think about that. And really speculative stocks with no fundamentals, I actually think they're going to have a good run this year because we're going to see so much money printing. We're going to see interest rates come down very significantly. So I think speculation is going to be great, but in the long run it doesn't help you. So it's one of those things where you need a firm exit rule. And again, check out the mini master class I recorded for you so you're a little bit better informed on that one.

19:24So what can a portfolio look like? Quality stocks, that's where I put the majority of my money. International, I add that into that. So for me that's most of it. Quality stocks, I also take about half of my money, maybe a little bit less, I trade that more actively. What do I look for in quality stocks in our community, in the paid part of it? This is the $27 a month paid part. This is intentionally very very affordable and you get research reports and also access to this little tool here.

19:57And these are the things I look at. So I look for margins that are ideally 60% or above. I look for return on invested capital. That's at least what I want as a return. So at the very least it has to be in line with the dollar devaluation. Free cash flow margins, think about that. You want a positive interest coverage ratio. PE ratios I'm not that bothered about, but you can obviously play around.

20:19But say you want to ramp this up to a little bit more impressive numbers. It then gives you a pretty short list. This is out of 5,000 stocks. Now you've only got 78 left that actually have solid data. We also have a little preset for that. You click on high quality and it'll give you here some stocks.

20:36Again, I'm not telling you to buy them. This isn't financial advice, but it's a good place to start. And then you can look at any of these and you go, "Oh, okay. I didn't realise that Intuit fits that bracket. Let me click on that." And you hit analyse and it gives you a nice little breakdown of what that company does. And that's just one of the little tools that we give you access to to just make better decisions.

21:00So you could also put your portfolio into that and a lot of other things. So that's the way I look at that. And again, precious metals, commodities, the percentage really depends on how you feel about the world. I think the more fearful and worried, they put more into it. I think the wealthy would put more into it because they don't need it to be so liquid, whereas stocks obviously are very nice and liquid.

21:22And then if we look a little bit at timeline here, look, the dollar is going to bounce around a little bit because Trump's a volatile chap. You're going to get market pullbacks. 5, 10% stock market, 10, 20, 30% are completely normal. They're part of a system. They're a feature, not a bug. But as long as tech earnings remain strong, as long as we're seeing them make more and more money out of AI, you're going to see more job losses.

21:46Yeah, Amazon has announced some more. Things are looking good except for the people who lost their jobs. Medium term, 1 to 3 years, the dollar decline continues and people are going to start to notice it around year 3 because they're like, "Wow, everything feels a lot more expensive." Inflation will remain elevated. Officially it'll be 2, 3, 4, 5% and that'll be good for you apparently. Unofficially it'll be 10, 20, 30% a year.

22:14Massive inflation that isn't measured. So this is why I want to be in hard assets and I do include the high quality stocks in hard assets. And then in the longer term, yeah, we might end up with a new monetary system.

22:27Cash is going to disappear. It'll be some sort of stablecoin, government-backed type thing, which will be weird and they can tax you whenever they feel like it and control you and all that kind of stuff, which is another reason people like to own metals. That's coming and whether that's going to be JP Morgan's or the US government's, we'll wait and see. But those who are in assets will not just survive, they will actually create generational wealth.

22:50The people who invested in '71 into hard assets are living on triplex apartments in Fifth Avenue today and overlooking the park and Park Lane and that kind of thing. And having a brilliant life and are wondering, their biggest problem is shall we go to the house in Nant or to the one in the Bahamas or something. And which jet should we take because mommy flew out on the one that I wanted.

23:19And that's kind of where we are. I honestly think this is a beautiful, amazing opportunity for those who are informed and it is the most horrid and unfair thing for those who are not and also for those who don't have the ability to put a significant amount of money into assets. So if it was me, I would focus on getting as much of my cash and income into hard assets as humanly possible.

23:47I'd spend the next couple of weeks and months studying and learning and getting confident and getting systems and maybe getting yourself a mentor and that kind of thing and build out a strategy that doesn't just get me to pay my bills by next month or by the end of the year or reduce my debt or something, but how do I actually think in decades and generations about how to generate this wealth and how do I share that with the people who come after me.

24:14So in the long term, I think the trend is very clear. Assets will go up. Dollar and currencies will continue to go down. Think about it. 87% loss of the dollar just since the 1970s. This time they're going to do it faster.

24:31So please, please, please stay invested. Make an action plan. Audit what you own. Reallocate. I'm not giving you advice. I'm just giving you some thought processes here. And then track what's going on out there, right? Keep an eye on the politics. It could change, but it's very unlikely because how do you get out of a problem with $384 trillion of debt? You make it worth less by printing more money.

25:00It's not complicated. It requires discipline, which is why I admire Buffett so much because he's happy to be unpopular and seen to be an idiot for years at a time and just smiles confidently to himself. And that's a skill I think we should all aim for.

25:16So you've got to decide who you want to be, which side of this you're going to want to be on. The ones who are going to be emotional will get slaughtered. The ones who understand this now or at least starting to understand this now and will dig deeper will win. That's my humble opinion.

25:34If you got some value out of this, please share it with somebody who might also get some value out of it so that their golden retrievers can be as exhausted from hiking as that chap back there. And I wish you a beautiful future. Your 401k just lost 28% of its value. Your portfolio probably did too. Not because the stock market crashed. It didn't.