100% Odds The US Gov Defaults On Debt

US Government Default: What the Markets are Telling Us

In this video, Mark Moss explains how the markets are pricing in a potential US government default. He discusses what assets are moving fast in anticipation of this default and some ways to play it.

The Possibility of a US Government Default

• The US government is broke with less than 30 days of money left.

• If the standoff between Republicans and Democrats over raising the debt ceiling doesn't get resolved fast, the government will be forced into a default.

• The markets are pricing in a 100% chance of default.

How the Markets are Pricing in an Actual Default

• The treasury is out of money, and tax receipts are down 35%.

• Janet Yellen told U.S lawmakers that her ability to use special accounting maneuvers to stay within the federal debt limit could be exhausted soon.

• Betting markets provide more accurate data than polls because people have skin in the game.

Assets Moving Fast in Anticipation of Default

• Gold prices have been rising as investors seek safe-haven assets.

• Bitcoin has been performing well as investors look for alternative investments outside traditional financial systems.

Ways to Play a Potential Default

• Consider investing in gold or bitcoin as safe-haven assets.

• Look for opportunities to short stocks or buy put options on companies that may be affected by a potential default.

Understanding the Power of Betting Markets

In this section, the speaker explains how markets are always betting markets and how the power of collective crowd is very powerful. The best way to look at these markets is through credit default swap (CDS) market.

CDS Market as an Accurate Indicator

• The CDS market is an insurance market that people buy if they think something bad will happen like a default.

• The cost of insuring against a US default has hit an all-time high, indicating that people are buying insurance because they think it could happen.

• CDS can be bought even if one does not own the asset. It's like buying hurricane insurance on someone else's house in a flood zone.

• Insurance premium for CDS is skyrocketing because people are trying to insure against a default.

Historical Analysis of Debt Ceiling Fight

• In 2011, there was a big debt ceiling fight between Republicans and Democrats who couldn't agree on raising the debt ceiling. This led to a drop in the United States government credit rating.

• Credit default swaps jumped up high during this time, indicating that people were worried about a possible default.

• Currently, we are way above that level with CDS hitting 151 basis points which suggests there is a 100% probability of default according to math.

Technical Default and Its Implications

• A technical default could occur where the US government pays back later but doesn't pay it on time triggering CDS.

• Even if there isn't a technical default or actual default, damage has already been done to the confidence in the US government, banking system, fed, treasury and US dollar.

Gold: The Ultimate Hedge Against Chaos

In this section, the speaker discusses gold as a hedge against chaos and how it has hit an all-time high globally. He also talks about the Dow to gold ratio and how it can be used to determine when to sell stocks and buy gold.

Gold as a Chaos Hedge

• Gold is the best chaos hedge for over 5,000 years.

• Gold has hit an all-time high globally.

• The Dow to gold ratio can be used to determine when to sell stocks and buy gold.

Playing Gold with Gold Miners

• One of the best ways to play a leveraged way with gold is with gold miners.

• Analysts are expecting Bank of America is expecting gold hit 2500 from 2000 to 2500 that's a really big move for gold but gold miners move multiple times faster.

• Gold mining stocks went up way faster than physical gold during previous peaks.

• Gold equities or miners are outperforming both physical gold and S&P 500.

Conclusion

• Investing in gold miners provides leverage compared to investing in physical gold.

Introduction

In this section, the speaker introduces the topic of evaluating a gold mining company and explains that he will be breaking down a specific company in real-time. He also provides a disclaimer that the video is sponsored.

Success Leaves Clues

• Successful people do things that lead to success.

• Tim Smith, CEO of US Gold Mining, left a lucrative job at Newmont to come to US Gold Mining because he believed there was something better for the next company.

• Smith has successfully explored and sold off deposits before.

• Alistair Still, former Newmont director of corporate development, is also part of the team at US Gold Mining.

Evaluating US Gold Mining

• Market cap of US Gold Mining is around $110 million.

• The company has about $20 million cash on hand.

• Enterprise value (EV) is around $90 million after subtracting cash on hand from market cap.

• Whistler project has about 9.4 million ounces of gold equivalent in the ground.

• Price per ounce of gold in the ground is around $10 based on EV divided by ounces in the ground.

• Whistler project is located in Alaska which has lower jurisdictional risk compared to some other countries.

Gold Mining Investment Opportunity

The speaker discusses a gold mining investment opportunity, explaining the potential returns and risks involved.

Potential Returns

• The company has the potential to become a 10x return from its current value if it can sell for $100 per ounce.

• At the current development stage, selling for $40 per ounce would still make it a 4x return from its current value.

Future Plans

• With the recent IPO and $20 million raised, the company plans to start drilling on their property.

• They plan to acquire other properties in the same area and take advantage of infrastructure projects in Alaska to bring down costs.

Risks and Uncertainties

• While there may be talk of government default, any default is likely to be technical rather than actual.

• The direction of massive money printing by governments is certain, leading to inflation and making gold a good hedge against it.

• Inflation is expected to rise throughout the decade, making gold miners an attractive investment opportunity.

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