The Unfolding – GMI April 2020

Published on: April 6th, 2020

The biggest event of all of our lifetimes has now begun to come clear, and Raoul believes we are still only in the first phase – the panic. It will most likely play out in three acts over several years: First, the panic, which is the liquidity phase. Then the hope, which is the correction phase. And finally, the insolvency, the brutal phase that changes everything, including the system itself. Instead of publishing parts of it in the monthly Deep Dive, Raoul decided to publish the whole report instead, because it is likely the most important one he’s ever written.


  • ZT
    Zul T.
    27 April 2020 @ 17:23
    Is no one here going to comment on how bummed they are that only GMI subscribers got to ride that 3975% rocket on June 20 99 Call/ 98.125 Put ? Not gonna lie. I am. Wonder what it'll take to be a GMI subscriber and ride these stratospheric returns while I mull purchasing a house next to Raoul's after I close those bad boys out.
  • GD
    Gabriel D.
    18 April 2020 @ 19:20
    What is the premise of the yuan sept calls? I don't recall this being discussed in a video or previous report, just trying to understand this one, thanks.
  • KT
    KEITH T.
    15 April 2020 @ 05:17
    Your points are compelling and certainly give into my personal bias. But I have some questions for Raoul: 1) You displayed charts for the SX7E and the TPNBNK index on pages 34 & 35, which are indexes for the top Euro and Japanese banks. Due to their decline in price, you conclude that the banking system of these regions are going to be lost. A downward chart, unless very close to zero which these are not, are not indicative of implosion. There could be a myriad of reasons why the index is down. For example, over the last 15 years the TPNBNK Index has been relatively flat, I could easily conclude that this is due Japan's inexistent / declining birth-rate and that there is only so much earnings growth a bank can generate with the same number of customers yoy. Can you provide some further insight as to why you think the entire banking system in EUR and JPN could be lost? 2) If the Fed takes on the pension liabilities, why would this lead to a loss of faith in the financial system and money itself (page 35)? Wouldn't this have the reverse effect (I know that sounds stupid but hear me out). Wouldn't the Fed guaranteeing these pension payouts provide further confidence that any payments promised to tax payers will be in fact fulfilled? Are you simply making the argument that the size of taking on the outstanding Pension debt would grow the Fed balance sheet to the point of no return? Would greatly appreciate a response but regardless: great publication and looking forward to the next.
  • MA
    Matthew A.
    13 April 2020 @ 00:16
    I follow the narrative that there is another leg down in this market -I want to believe it. And it is compelling when you see the list of QoQ GDP declines vs. Market declines in preceding recessions. Is not the point of all the Fed intervention to prevent a 30% plunge from here? Doesn't the fact that there was no Fed intervention (or existence) during the 1920's crash make this fundamentally different? I want to agree with you and the base economics will prove to be beyond dismal. I just don't know if the market will care as much because the Fed is "here to save the day." I'd love to hear a rebuttal.
  • NJ
    Nesko J.
    10 April 2020 @ 19:50
    How do you print this report? Or move to Kindle or iBooks for easy reading. Anyone?
  • CS
    C S.
    10 April 2020 @ 11:53
    Raoul: 1/ real estate for rental income is it a good idea (foreseeing loss of purchasing power by fiat currencies the real estate is a way to preserve wealth? And foreseeing loss of yield from bonds?) 2/ equities would replace yield of bonds? Hence may not go down as much as 1929-1933. Plus all the stimulus done by central banks. 3/ apart from gold mining stocks is there any type of equities which Raoul will hold or buy now or will recommend buying? Anything like healthcare, tech, reits, anything at all? Or Raoul is totally bearish all kinds of stocks? Thank you
  • RG
    Razmig G.
    9 April 2020 @ 16:35
    Here's one question touching on what Raoul wrote in light of the continious Fed actions to keep equities afloat: - Do we finally declare that Macro is dead & just "buy the dip" ?
  • AS
    Amit S.
    9 April 2020 @ 15:31
    Questions for Harry, we will bombard Raoul later, during the AMA! 1) Has the Fed run out of bullets after today's announcement? 2) Opec+ announced 10MM bpd cut, buy the rumour sell the fact? i.e. oil lower from here 3) Is the world awash with USD again? Given weakness in King dollar
  • GP
    Gregory P.
    9 April 2020 @ 05:13
    Raoul- Thanks for the analysis. Question on the dollar system reset. When that time comes Other than bitcoin and gold how do you think stocks of companies will fair during this reset. ( assume solvent well run companies).
  • DM
    Dominic M.
    8 April 2020 @ 23:30
    Raoul, How do you see deflation / inflation playing out over the coming year/s? I'm trying to understand this especially in regards to the investment prospects of residential (rental) real estate, with its relatively static rents. Any thoughts appreciated. TY
  • OG
    O G.
    8 April 2020 @ 23:08
    What is a good resource on buying BTC (exchanges, etc)? I'm in Europe.
  • SD
    S D.
    8 April 2020 @ 22:29
    Thanks for sharing this Raoul! Really helpful.
  • IP
    IDA P.
    8 April 2020 @ 18:01
    I have one question: do you think leveraged ETFS and short ETFS will survive the downturn if and when it arrives? short etfs are useful to hedge for those who cannot use options or futures, but I'm worried some liquidity crisis may overthrow these products as well....
  • DM
    Davis M.
    7 April 2020 @ 10:59
    Really appreciate sharing and your view point. While I am praying this does not come to fruition and will be happy if it does not, I feel the odds of some version of it happening are high. Either way, gold and BTC will do well in the long term. A couple of questions. For gold, are you holding physical or do you think a gold trust such as Sprott Trust (PHYS) is a good vehicle? Also, for cash, how are you holding this? You have recommended UUP as a vehicle instead of FX trades, or do you mean having cash in an account (brokerage account - short term T-bills and not bank) ready for deploying or use in the future.
    • HM
      Harry M. | Real Vision
      8 April 2020 @ 17:11
      My recollection is that RP has both physical and paper gold. I think there is a case for holding both. Physical trades at a premium but that premium might well reflect perfectly reasonable concerns about the future. Remember FDR confiscated privately held gold. This kind of scenario is one which would justify a premium for physical, although its worth noting that FDR actually had Treasury agents go through people's safe deposit boxes.
  • TY
    Tony Y.
    8 April 2020 @ 10:19
    Raoul, thank you so much for doing such a great job keeping us up to date by sharing your views in these troubling times. Thanks to you, I was able to protect my life savings from the recent stock fallout and continue to provide for my family even though I’m now out of a job. Biggest question I have for you is relating to SPX which you see downside toward 1800, so would you suggest I start shorting now or wait for higher levels, and if wait, what is your target entry level to short? Thank you so much once again, real vision saved my family’s life!
    • HM
      Harry M. | Real Vision
      8 April 2020 @ 17:05
      While waiting for RP, I would suggest that you probably want to think of an appropriate trading plan to meet your objectives. If this is about deploying retirement funds then you probably want it invested eventually. But not necessarily at these levels. If this is about trading to make a profit over a shorter time scale, then you might want to do some work on technical entry and exit levels and have a stop losses in mind for attempts to short it. That said, while the market wants to trade the good news of declining death rates, it hasn't really got its arms around the bad news of massive and growing losses and debts all over the private sector.
  • RR
    Romein R.
    8 April 2020 @ 13:21
    Thank you Raoul, this was awesome. If you think Fed funds will go negative, I’m wondering if you are looking at Eurodollar Dec 100 calls, they are only 0.02, and at at Fed Funds rate of -2% these should theoretically be worth $2, 100x gain. Also plenty of time till expiry. Have you considered this trade?
    • HM
      Harry M. | Real Vision
      8 April 2020 @ 17:01
      I can see why these look interesting. They will probably work if rates go negative. However I would probably prefer to express in futures options on government bonds or notes myself simply because Libor is an unsecured index. That said, the Fed will probably have found a way to force Libor lower in a few months. For what little my opinion is worth.
  • NY
    Nathan Y.
    8 April 2020 @ 16:45
    Raoul, I want to make sure that I do not miss out on something big by dismissing Bitcoin, but I have huge reservations. How would you respond to the criticisms of Bitcoin by figures such as Jim Rickards and George Gilder? In his book "Life After Google," Gilder points out that Bitcoin is deflationary in nature due to its design. Some key excerpts from Gilders' book: “While Satoshi was beyond brilliant in creating the blockchain as the basis for bitcoin, Satoshi had no understanding of currency as a unit of account. By limiting bitcoin’s supply to 21 million units over a 131-year period, Satoshi designed bitcoin as a deflationary currency. . . . Because of its deflationary design, bitcoin is used more as a volatile investment bet than as a measuring stick or unit of account. What I missed in comparing bitcoin and gold was that bitcoin is the transactions medium itself rather than a stable metric for the valuation of fiat monies. For gold, transactions are incidental; for bitcoin, transactions are the key point. Bitcoin, unlike gold, must therefore increase in either volume or value if the system is to succeed. ...Bitcoin, as now constituted, cannot be a currency. Currencies create value by measuring it. The price of bitcoin changes with demand. You could respond that the price of the dollar also changes with demand. As I show in the Scandal of Money, that has been mostly true since 1971, and such fluctuations are the Achilles’ heel of the dollar as a long-term currency. “No other basic unit of measure,” says Kendall—whether it’s the second, the meter, the ampere, or the kilogram—“changes in value with demand. They are standards” based on physical constants. If money is a measuring stick, it cannot respond to demand. “If bitcoin cannot fulfill the required roles of currency, its long-term utility as a currency is nil. . . . Bitcoin would disappear into the ether from which it came. . . . Because bitcoin has limited its supply to a fixed amount that is already mostly realized it will have a short shelf-life as a functional currency.”
    • HM
      Harry M. | Real Vision
      8 April 2020 @ 16:59
      I think I am just not well briefed enough on this subject to even venture a good counter argument. Will wait for RP.
  • jR
    jacco R.
    8 April 2020 @ 13:55
    Hi Raoul, - thanks for sharing the article. As you point out history doesn't repeat but rhymes. What you point out as well is "there's never just one cockroach" with the offshore (outside US) Dollar debts. It feels very much that the link which will open 'most' peoples eyes is how much it will hurt EM. EM seems to be in a huge unquantifiable deep hole ( The other thing what is amazing is that Lipper showed inflows in equity funds in March meaning buy-the-dip is still prevailing. What I'm wondering as such is if the 2191 on the S&P was the first cycle low or whether we go lower once more to your 1800-1900? The only real difference with the '30's is (1) the FED came out with unlimited bazoka's early on and (2) governments have been very aggressive implementing 'rescue' funding. However what worries me at this stage is that the narrative of the market is completely wrong it is going up because the fatalities are less but that is only happening because economies are closed, if they reopen to soon the fatalities will rise again (which I am certain we will see - which is why Singapore, HK, China etc. are all closing parts of their economy). Let us know your thoughts. Thanks again!
    • HM
      Harry M. | Real Vision
      8 April 2020 @ 16:58
      I will comment pending Raoul coming back. I totally take your point on EM. I watch EM debt very closely and I have been struck by two things. Foreign currency paper has been destroyed. Pemex (I know, oil related) has been destroyed. But a lot of EM sov dollar debt is trading very cheap. Partly that reflects commodity prices. Partly it reflects weak fiscal positions. Either way, this will impact demand for imports in these countries, so we will see it in S&P500 earnings. I think the markets have been too busy worry about first order effects to worry about second order. Still, I hate to dig myself into a corner with any trade. Remember the joke about the US carrier and the Canadian lighthouse? Never forget the first law of trading - protect your capital!
  • RP
    Raoul P. | Founder
    7 April 2020 @ 15:09
    I'll answer all questions in the Ask Me Anything. Much easier than doing it here as there are so many!
    • MD
      Matt D.
      8 April 2020 @ 05:38
      Incredible article Raoul. Thank you so much for sharing. When/where is the AMA?
    • DD
      Donal D.
      8 April 2020 @ 10:15
      Raoul, Many thanks for sharing the report as I know your institutional clients pay a lot of money for it. Simple question where is the "Ask Me Anything" you refer to is it on the Real Vision website or the GMI site? Thanks
    • MR
      Milton R. | Founder
      8 April 2020 @ 15:40
      It will be on RV and Pro members will get an email about this 🙌
  • SS
    S S.
    6 April 2020 @ 17:11
    Great work. Very enjoyable read. Does anyone know the ticker for ADXY on Saxobank. Can't seem to find it anywhere.
    • GS
      George S.
      6 April 2020 @ 18:12
      I am not sure they have it. I also don't know of a proper ETF that is tracking. What i like doing is basically build my own basket. Either equal weight or you can adopt ADXY weights if you want to go there.
    • LP
      Lance P.
      8 April 2020 @ 11:03
      Similar to the DXY being dominated by the EUR the ADXY is dominated by around 40% CNH, then 9-12% each of KRW, SGD, Rupee etc Good luck
  • KC
    Kurt C.
    6 April 2020 @ 20:11
    Great work indeed, enjoyed every paragraph since it all makes sense, and you can feel it is written from the heart.. I also agree with the fear factor, you clearly see it in the economy going forward, maybe the same is at play in the virus... For example, Sweden, has no quarantine or curfews imposed on its citizenry, and the cases seem to be quite low so far... Maybe, the only thing to fear, is fear itself after all? Thanks again for sharing your work with us Raoul, you are not a mad man :) Kurt
    • wj
      wiktor j.
      6 April 2020 @ 21:36
      Thats because sweden doesnt test. Tests are not accurate. Sweden doesnt even know the exact number of deaths that happen due to covid. I have read articals of people writting that relatives died and its not even registered in the local numbers. The nurses and doctors Work without masks with short sleeves with covid patients. You will within 4 weeks will see a new Wuhan or NY in Sweden. I am thinking of taking that bet with Raoul on that sweden wont Lock Down within 2 weeks because the ministry in charge doesn't care. It came out that every 2nd elderly living in an elder home are now infected with covid in Stockholm and all that was said was perhaps we tested too Little. I listen to the updates everyday and am shocked.
    • SS
      Shanthi S.
      7 April 2020 @ 01:03
      @Wiktor j. That’s horrific news. I had suspected as much. Very sad.
    • KC
      Kurt C.
      7 April 2020 @ 03:18
      @wiktor j. .. interesting and sad if it would turn out that way... I also read that numbers may be manipulated in the other way. In numerous ways... obviously, I don’t know for sure...
    • JG
      Johan G.
      7 April 2020 @ 10:44
      The Swedes reported one day 42 deaths, then a week later upped it to more than 100 for that same day. Claim it takes time to get real numbers, and that they do not try to conceal anything, but they do not correct the aggregate numbers.......So real death toll is at least twice the official numbers. Hospitals in Stockholm are presently at their limit, and could collapse as we have seen in Italy and Spain if the increase in patients continue. I fear for the Swedes, but hope for the best
    • KC
      Kurt C.
      8 April 2020 @ 08:53
      @wiktor j. You made me do some research. What I found may surprise you. I found Sweden does more tests per mio than Netherlands, UK, France... Deaths per mio, less than Netherlands, UK.... I used tof din that out... So, where do you get your data from? Hope this helps to bring more clarity and perspective..
  • GC
    Geoffrey C.
    8 April 2020 @ 04:20
    Hi Raoul Could you provide your readers with the amount of excess global capacity that is out there, as this got to be written off. In this coming environment which would perform better, gold or gold mining stocks. Who is the best segregated gold repository service world wide. Thank you for an excellent article. Geoffrey C BTW: It was a generous thing for you to share this article with all of your readers.
  • JL
    Jonathan L.
    7 April 2020 @ 08:21
    Hi Raoul I noticed you closed out long US 10Y for GMI subscribers but have recently opened it again for RV Pro subscribers - why the discrepancy here? Thanks
    • RP
      Raoul P. | Founder
      7 April 2020 @ 15:08
      I didn't show the trade ref's for GMI. I add to all my bond trades again for GMI too.
  • GB
    Gold B.
    7 April 2020 @ 08:34
    Remarkable report. Am wondering if we have simply now skipped that additional sell-off before the multi-month rally before true capitulation, and gone straight to the rally itself. Or perhaps that early April sell-off has been moved back to late April or May.
    • RP
      Raoul P. | Founder
      7 April 2020 @ 15:07
      Im mulling the same...
  • RG
    Rob G.
    7 April 2020 @ 09:46
    Appreciate your candid and pragmatic view of the world Raoul, brilliant report. Do you hold BTC on a cold wallet or are there exchanges you would trust? I'm guessing the fomer.
    • RP
      Raoul P. | Founder
      7 April 2020 @ 15:07
      I acquire in exchanges and then sweep into a cold wallet.
  • PE
    Peter E.
    7 April 2020 @ 11:42
    Hi Raoul, Got a little confused re Eurodollar and US Trade weighted Broad Dollar v ECRI. Is the difference, only the percentage of Euro participation in the "Broad"? Thinking about peaks and troughs in the Eurodollar, and your comment "Gold will be the only man left standing", does Gold gap to reval to a weighted currency basket, or does it fall short term with with eventual dollar decline? Thanks for all your insights. Went to physical gold production a while ago as a private.Seems smart now. All the very best, Peter
  • B
    Bob .
    7 April 2020 @ 07:48
    Thanks for sharing. I think it will very interesting to see how fast and how far the USD moves and using a template of the 1930's could prove quite interesting.
  • JW
    J W.
    7 April 2020 @ 05:57
    I need to read this a couple of times to let is sink in of course, but wanted to say thanks for making it available to us. It's a compelling framework. One of the most interesting questions out there is whether we are at a fourth turning or whether 'we' just have a short memory and go back to our old ways once this is over. I think it's 'easier' to assess the economic and financial impact than the collective psyche of mankind. In your report you correctly mention that things are grey. I was very surprised to see video from China recently, indicating that people are gathering en masse again. So soon. Short memory? Stupity? I can't understand why one would gather in massive crowds so soon after what surely was a very scary and traumatic event for many. But they did. Will that be the collective response in Europe and US as well. People are still gathering on beaches and in parks in Florida and Australia. We see what is happening in Sweden. I guess we'll see what happens when things get much worse, This thing is far from over. Anyway, for now...stay healthy & safe.
  • RK
    Robert K.
    7 April 2020 @ 05:40
    @Raoul, Really appreciate the report! About BTC, given that you are recommending it, must mean that you also understand it well enough. 1. What is your take on the impact of BTC Halving in May? The timing is an interesting one regarding all the other things happening in the economy. 2. How big are the risks that the BTC market with its miners and investors will "loose appetite" for BTC because of much of the economic world around them turning sour? 3. You mention in the GMI report about governments experimenting in digital currencies etc. Which concrete experiments speak the most volume to you?
  • YA
    Yaz A.
    7 April 2020 @ 03:42
    Thanks Raoul, took my time to read your report. Intense, and refreshing as we now moderately have a road map... Question on BTC Do you think BTC will be the Best choice, or something like (XRP which I don't own) That's more centralized? My fear is Govs won't favor the decentralized approach to digital currency, and also BTC use case is limited to store of value only vs other cryptos. I've owned BTC since 2016, and as soon as many people try moving their BTC from wallets to exchange it takes forever to get confirmations to be able to send and receive your BTC, sometimes as long as 2 hours and in some cases longer. ETH is far superb in this use-case Vs BTC.
  • jR
    jacco R.
    7 April 2020 @ 02:51
    Thanks for the report. Can find it on the app but not on the website. My phone’s screen is dead and non-essential can’t get it fixed so can’t really read. Can you post on the website as well? Thanks
  • MC
    Matthew C.
    7 April 2020 @ 02:49
    Hi what instrument was used for the currency trades? Options on /6E and /6J don't go out very far. Thanks.
  • SS
    Shanthi S.
    7 April 2020 @ 01:06
    Ominous, but wonderful read. Thank you very very much Raoul.
  • JS
    Jim S.
    6 April 2020 @ 22:42
    Great piece, thanks so much for sharing! The comparisons to 1929 are quite ominous. Couple of questions/thoughts if you could be so kind to comment. Do you consider gold miners as part of your core gold position? Do you foresee more forced selling of BTC and/or Gold, going from 4-5? Do you consider GBTC to be a safe allocation to BTC for capital tied up in accounts w/o access to the real thing? Thanks so much for all you do!
    • RP
      Raoul P. | Founder
      6 April 2020 @ 23:06
      Im not long gold miners but may at some point. On BTC or Gold, I just don't don't but we have to prepare for another sell off. I think the hope phase might see gold get sold but not sure
  • SH
    Sean H.
    6 April 2020 @ 22:44
    A generous gift Raoul. Thank you for sharing. I hope not, however, I'm afraid it may be so.
  • NR
    Nathan R.
    6 April 2020 @ 21:38
    Thank you Raoul. Do you have a thesis on Softs as well? Curious how those performed during the 30’s corollary.
    • RP
      Raoul P. | Founder
      6 April 2020 @ 21:52
      Im not sure. I founded a softs fund in 2007. They are incredibly hard to trade macro on due to weather etc. Its a really insider market or CTA/trend followers.
  • WM
    Will M.
    6 April 2020 @ 19:19
    Very good, if slightly upsetting dissertation. The date add powerful weight to your arguments Raoul. I do wonder, per Mr Martin Armstrong and his ECM etc, is it not probably that the world sends all its capital to the USA to try and escape carnage elsewhere? Will a rising dollar not suck in foreign capital who see the possibility of massive EX gains together with potential stock market gains? Could this not produce a mother of all rallies and Minsky melt up way above the previous market highs in a blow off? Other than that, I have poured myself a nice deep hot bath, now where did I put the razor.....
    • RP
      Raoul P. | Founder
      6 April 2020 @ 19:54
      haha...there are lots of potential outcomes. This is my base case for now. We can assess in due course and navigate accordingly.
    • I4
      I 4.
      6 April 2020 @ 20:01
      You get that answer looking to Venezuela, in their shit currency terms, the Venezuela stock market were the best performing stock market in last 5 years. DOW going to 40k on a scenario of USD strength aren´t 2 compatible events to occur at same time on the likely biggest US corporate bankruptcy wave of our lifetimes.
  • MD
    Michael D.
    6 April 2020 @ 19:51
    Raoul, thank you for making this available to Pro subscribers. Very, very helpful. My own thinking for how to manage my family's path through this decade is clearer after reading this sobering and detailed analysis. As you, I hope that this projection turns out to be wrong -- but no harm in preparing in case it is right. Thank you again.
    • RP
      Raoul P. | Founder
      6 April 2020 @ 19:55
      Yes, we can assess in due course and navigate accordingly then.
  • AS
    Alan S.
    6 April 2020 @ 18:44
    Quick question: For this trade "Sell JPY (Buy $/JPY)", I am using puts on the FXY, but they only go out as far as September. Does anyone have a means, without using futures, to do the trade under long-term risk of "Buy 3-Yr USD/JPY 120 Calls"?
    • RP
      Raoul P. | Founder
      6 April 2020 @ 19:54
      GMI is for professionals so they have access to OTC options from banks.
  • JM
    Jake M.
    6 April 2020 @ 19:32
    Hi Raoul, thank you so much for the GMI report. The analysis on the peak panic followed by hope seems really spot on. I think we have just reached a peak as the recent news just showed. One noob question: you conjectured that we might see a rally that lasts a few months based on hope. Which numeric data point can we see as proxy to support such sentiment? Is it mostly based on the general sentiment you derive from your conversation with fund managers in industry?
    • RP
      Raoul P. | Founder
      6 April 2020 @ 19:53
      Yes and just experience of how things tend to play out