With the massive pullback in cryptocurrency prices and the collapse of crypto exchange FTX, the term “crypto winter” is already making headlines.
But Peter Schiff, CEO and chief global strategist at Euro Pacific Capital, doesn’t believe that’s an accurate term to describe the situation.
“This is not #cryptowinter. This means spring is coming. This is also not a crypto ice age as even that ended after a few million years,” he tweeted. “It’s crypto extinction.”
This is a dire warning. But this isn’t the first time Schiff has sounded the alarm.
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Last year, when Bitcoin hit $50,000 and the upward momentum seemed unstoppable, he said, “While a temporary move to $100K is possible, a permanent move down to zero is inevitable.”
If you share the same opinion, you probably want to know where Schiff is taking refuge in this ugly market.
Since Euro Pacific Asset Management just released its latest 13F filing — a report that institutional investment managers file quarterly to disclose their holdings — let’s take a look at some notable themes in Schiff’s portfolio.
Schiff has long been a fan of the yellow metal.
“The problem with the dollar is that it has no intrinsic value,” he once said. “Gold will retain its value and you will always be able to buy more food with your gold.”
In fact, when Schiff tweeted about crypto’s demise, he also mentioned that gold “will rise again to usher in a new breed of asset-backed cryptos.”
As always, he puts his money where his mouth is.
As of September 30, Euro Pacific Asset Management owned 1.655 million shares of Barrick Gold (GOLD), 431,952 shares of Agnico Eagle Mines (AEM) and 317,495 shares of Newmont (NEM).
In fact, Barrick was the firm’s largest holding, accounting for 6.8% of its portfolio. Agnico and Newmont were the third and sixth largest holdings, respectively.
Gold cannot be printed out of thin air like fiat money, and its safe-haven status means that demand usually increases during times of uncertainty.
If gold prices rise, miners such as Newmont, Barrick and Agnico are likely to enjoy higher profits.
Recession-proof yielding stocks
Dividend stocks offer investors a great way to earn a passive income stream, but some can also be used as a hedge against recessions.
Example: The second largest holding in Euro Pacific is cigarette giant British American Tobacco (BTI), which represents 5.3% of the portfolio.
The maker of Kent and Dunhill cigarettes pays a quarterly dividend of 74 cents per share, giving the stock an attractive annual yield of 7.6%.
Schiff’s fund also owns over 157,766 shares of Philip Morris International ( PM ), another tobacco king with a 5.4% dividend yield. Cigarette maker Marlboro is Euro Pacific’s seventh largest holding with a portfolio weight of 3.5%.
The demand for cigarettes is highly inelastic, meaning that large changes in price cause only small changes in demand—and that demand is largely immune to economic shocks.
If you like investing in so-called sin stocks, British American and Philip Morris may be worth investigating further.
When it comes to playing defense, there’s one recession-proof sector that shouldn’t be overlooked: agriculture.
It’s simple. No matter what happens, people still need to eat.
Schiff doesn’t talk agriculture as much as precious metals, but Euro Pacific does own 124,818 shares of fertilizer maker Nutrien ( NTR ).
As one of the largest suppliers of raw materials and services in the world, Nutrien is firmly positioned even if the economy enters a severe downturn. In the first nine months of 2022, the company generated record net profits of $6.6 billion.
Shares of Nutrien are up about 3% in 2022, in stark contrast to the S&P 500’s double-digit decline since the start of the year.
Given the uncertainty facing the US economy, investing in agriculture could provide peace of mind for risk-averse investors.
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This article provides information only and should not be construed as advice. Provided without any warranty.