Over the past two weeks, Mauldin Economics hosted the first-ever virtual Strategic Investment Conference. Five full days of deep discussions concerning global affairs, unprecedented market forces, and how best to prepare your portfolios.

Building off of the 2019 conference, it came as no surprise that debt and geopolitics remained the center of attention. Last year’s discussions about interest rates remained a hot topic, however, the story shifted more towards the state of global currencies. And lastly, a quick note on hard assets, gold in particular.


Over the past decade, corporate balance sheets were stretched thin via access to cheap money. Dangerous obsessions over the short-term benefits of stock buybacks led to extreme capital mismanagement. These over-leveraged companies left themselves exposed to any market disruption; then 2020 hit.

In an effort to prevent global economies from falling into depression, Central Banks have launched a myriad of emergency bailout programs. The “whatever it takes” mentality to prop up asset prices has driven debt levels to astronomical levels. Solving a debt problem with more debt is a bold strategy, what could possibly go wrong? Inevitably, it would appear that tax hikes are coming, and preparing for such a scenario might be wise.


As the COVID-19 narrative begins to dissipate and economies start reopening, trade war headlines have resurfaced. The propaganda machine is in full force and the “hate China” rhetoric has accelerated in the wake of the pandemic. It is no secret that the trade war has revolved around tech supremacy. And, according to Mark Yusko, Cold War 2.0 is well underway – a war between “chips not ships”.  As he so eloquently put it, “10 years ago, China chose to be the best in 5G and artificial intelligence, while the US chose to be the best in social media”. With China’s focus on the long-term, expect ongoing confrontation as yielding to American pressures is likely not on the table. 


Forecasting for the US dollar varied based on the time horizon. Compelling arguments were made from some heavy-hitting investing legends. In the shorter-term, Felix Zulauf highlighted that the US dollar always performs best in a shrinking global growth environment. With a significant portion of global debt being denominated in $USD, paying back that debt will create demand for dollars.

Charles Gave spoke about what he considers the three primary global currencies: the Dollar, the Euro and China’s Renminbi. Yes, you read that correctly, not the Yen, not the Pound, but the Renminbi. In his view, the Euro is facing serious problems given the mounting conflicts between the northern and southern countries. Further, negative interest rates in Europe render the Euro’s reserve of value function worthless. The Dollar is safe, for now. Demand for dollars is driven by debts, trade, and oil. For Gave, the dollar’s vulnerability lies in whether or not oil begins trading in other currencies. If you’ve been to our annual Outlook presentations, this should sound familiar – see Rise of the Petrodollar Alternative. Lastly, his view is that China is trying to de-dollarize Asia, not become the reserve currency. The question is, does it make sense that trade between Asian countries should be settled in US dollars? Global consumption set to be driven by Asia going forward, which will cause a significant revaluation of these Asian currencies. China stands to benefit from its long-term initiatives and economic positioning of strength.


Ross Beaty, founder and chairman of Pan American Silver Corp. and Equinox Gold Corp., has been in the metals and mining industry for 45 years. He stated that the current macroeconomic fundamentals for the investment case in gold and silver are the best he’s ever seen. The price of gold bottom in late 2015, indicating that a shift was happening well before COVID-19. You may have noticed that we recently trimmed part of our holding in Wheaton Precious Metals (WPM). At the risk of confirmation bias, Marin Katusa, an expert resources analyst, indicated that gold royalty and streaming companies (such as WPM) are expensive and “priced for perfection”, trading at 3x Net Asset Value. While maintaining our long bias towards gold, valuations such as this provide trading opportunities around our core positioning.  

Expert Takeaways

  • Gold will be a good hedge against the instability of extreme deflation and/or inflation.
  • Long Asian cash and fixed income.
  • At only 4% of the market, watch energy for a potential surprise to the upside.
  • Longer-term, USD heads lower as the Fed prints money to help ease the burden of excessive debt and foreign demand weakens.


We have been talking about these global transitions for the past 2 years (refer to OUTLOOK 2019 and OUTLOOK 2020). COVID-19 did not create new trends but rather accelerated existing trends, pulling forward many investments. Peter Diamandis of Singularity University figures that 3-5 years' worth of change has occurred in the past 3 months – Med-Tech and Hard Assets are great examples of this. Ultimately, the key takeaway from this conference was the importance of balancing risk. There are still a lot of questions that remain to be answered.

In short, it’s my view that if you’re experiencing something that has never been seen before, you simply can’t say you know how it’ll turn out.

Howard Marks