Rescue Liquidity Drying Up! The Issachar Fund is about 33% invested, about 20% in a physical Gold ETF, and the remainder in growth stocks! The rescue liquidity the Fed created to save the banks is beginning to dry up, and many stocks are starting to show results of rolling over. We were positioned for a continuation of a growth stock up-trend created by another round of Fed balance sheet expansion (QE). However, the market seems to be in “risk off” mode as the Fed unwinds its balance sheet (QT) like it was doing before the Fed’s liquidity injection to prevent more “bank runs.” There is still a lot of “free money” sloshing around supporting the big liquid names with the heaviest weightings in the major indexes. However, many recent leading stocks have come under heavy selling pressure, indicating the stock market may again see trouble on the horizon. I am bullish on gold because it is trending higher on above-average volume, which tells me the “big money” may be driving the uptrend. If gold is in a new bull market and exceeds the $2,000/oz resistance, the historically inversely correlated stock market could be headed in the opposite direction. In my opinion, this is not a time to buy and hold stocks. The S&P 500 index is down about -12%, the NASDAQ 100 tech index is down about -19%, and 20-year Treasury Bond prices are down about -24% since 12/31/21. (There is no guarantee that any investment will achieve its objectives, generate positive returns, or avoid losses.)
The Fed decreased its balance sheet by $74 billion last week on top of a $28 billion decline the prior week! It appears the Fed may have averted more bank runs by increasing liquidity (QE), but they may be focused again on bringing down inflation by unwinding their balance sheet and raising rates. Either is not a welcome sign for the stock market because the market thrives on liquidity. When liquidity dries up, stock prices tend to fall due to a lack of buyers on the “dip.” The Fed seems “trapped” because they have committed to fighting inflation by raising rates and decreasing its balance sheet, which has historically been bad for the economy and the stock market. If we get another surprise event like the recent “run on the banks,” the Fed will likely print more “free money,” which will probably create more economic growth killing inflation. It sure seems like bad economic Washington policies have made this mess, and it may take a regime change in 2024 to put us back on the right path to prosperity.
The dollar has been in a downtrend since peaking last September! Russia, China, India, and Saudi Arabia are looking to trade oil in non-dollar currencies. This de-Dollarization trend seems to be spreading, and many believe the US dollar will lose its “global reserve” status. If the dollar loses its reserve currency status, we could see it decline rapidly and gold rise faster. I do not want this to happen, but it sure feels like current policies may have intentionally been designed to collapse America and bring a new world order of social governance. I believe our Constitution was “God-inspired,” God still has His healing hand on America, and He will get the glory for making America Great Again!
Bottom Line: We reduced exposure in growth stocks but increased our gold position because that seems to be where money flows. Cryptocurrencies have soaked up much of the recent excess Fed-induced liquidity, but I do not plan to own any Bitcoins. However, FedNow will launch in July, which could lead to a Central Bank Digital Currency (CBDC). The Texas Senate introduced bills requiring the state comptroller to establish a digital currency fully backed by gold and fully redeemable in cash or gold. ChatGPT could be the “game changer” that helps replace dollars for digital coins. A US digital currency would give the government more control over what we eat, drink, and do, which I am against. My faith is in Jesus and what He has already done for everyone. I pray more people will seek and find the Truth that sets them free. Grace & Peace to everyone!
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Investors should carefully consider the investment objectives, risks, charges, and expenses of the Issachar Fund. This and other important information about the Fund are contained in the Prospectus, obtained by calling 1-866-787-8355 or visiting IssacharFund.com. The Prospectus should be read carefully before investing. The Issachar Fund is distributed by Northern Lights Distributors, LLC., member FINRA/SIPC. Horizon Capital Management Inc. (HCM) is not affiliated with Northern Lights Distributors, LLC.
Important Risk Information: Mutual Funds involve risks, including the possible loss of principal. An investment in the Fund may not be appropriate for all investors. The Fund may hold cash positions when the Adviser feels that the market is not producing returns greater than the short-term cash investments in which the Fund may invest. There is a risk that the sections of the market in which the Fund invests will begin to rise or fall rapidly, and the Fund will not be able to sell stocks quickly enough to avoid losses or reinvest its cash positions into areas of the advancing market quickly enough to capture the initial returns of changing market conditions. The Adviser’s judgment about the attractiveness, value, and potential appreciation of particular asset classes and securities in which the Fund invests may prove incorrect and may not produce the desired results. Past performance is no guarantee of future results. Ratings are only one form of Fund performance and should not be used as the sole consideration in an investment decision. Opinions expressed are subject to change, not guaranteed, and should not be considered investment advice. There is no assurance these opinions or forecasts will come to pass, and past performance is no assurance of future results. For more information regarding the fund, including current performance, please visit IssacharFund.com. Review Code: 5325-NLD-04/10/2023.