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When Michael Burry saw the impending housing crisis looming large, he went out and bought credit default swaps on subprime mortgages.
What did he know that the broad market didn’t?
He knew the structure of the housing market better than most because he did the homework. He dug through the numbers and looked at the mortgages that formed the different tranches. In short, he knew it as if he’d built the entire pile of isht himself. He knew it was rotten and it was only a matter of time before it all collapsed, and THAT is why he had the conviction to buy CDSs like they were the last bottles of water in the middle of the Sahara.
Fast forward to today, and tell me what’s more screwed up than those mortgage backed securities and credit default swaps the bankers put together pre-GFC?
I’ll tell you what. Global central bank interventions, and the various insane monetary policies enacted in the last decade, which have blown central bank balance sheets up like some giant malignant tumour, that’s what.
The Fox Smells His Own Hole
The folks who’ve been at the helm of these central bank ships, the ones who put all this together — we could say they’re lunatics, but they’re lunatics who still realise they’re playing with fire.
And when you’re playing with fire, it’s only reasonable you stack a few fire extinguishers in the cupboard.
What fire extinguishers are those?
Way back we predicted the current global trade wars gracing your news channels today.
Next? Currency wars. Watch!
And this is when gold gets really interesting, because it is when faith in currency comes into question that gold really benefits.