With the massive retreat of cryptocurrency prices and the collapse of crypto exchange FTX, the term “crypto winter” is now 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.
“It’s not a #crypto winter. That means spring is coming. It’s also not a crypto ice age, because it ended after a million years,” he wrote in a tweet. “This the extinction of crypto.”
That is a dire warning. But this is not the first time Schiff has sounded the alarm.
Don’t forget
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 to zero is inevitable.”
If you feel the same way, you might want to know where Schiff is finding refuge in this ugly market.
Because Euro Pacific Asset Management just released its latest 13F filing — a report that institutional investment managers file every quarter to disclose their holdings — let’s take a look Let’s look at some of the notable themes in Schiff’s portfolio.
GOLD
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 stores its value, and you can always buy more food with your gold.”
In fact, when Schiff tweeted about the extinction of crypto, he also mentioned that gold “will rise again to lead 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 held 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 is the company’s top holding, representing 6.8% of its portfolio. Agnico and Newmont are 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 often increases in times of uncertainty.
If gold prices rise, miners like Newmont, Barrick, and Agnico will likely enjoy greater profits.
Recession-proof income 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.
Case in point: The second largest holding in the Euro Pacific is cigarette giant British American Tobacco (BTI), which accounts for 5.3% of the portfolio.
The maker of Kent and Dunhill cigarettes pays quarterly dividends of 74 cents per share, giving the stock an attractive annual yield of 7.6%.
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Schiff’s fund also owns more than 157,766 shares of Philip Morris International (PM), another tobacco king with a dividend yield of 5.4%. The Marlboro cigarette producer is the seventh largest holding in Euro Pacific with a portfolio weight of 3.5%.
The demand for cigarettes is highly inelastic, meaning that large changes in price induce only small changes in demand – and that demand is largely unaffected by economic shocks.
If you’re comfortable investing in so-called guilt stocks, British American and Philip Morris may be worth exploring further.
agriculture
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 didn’t talk about agriculture as much as precious metals, but Euro Pacific has 124,818 shares in fertilizer producer Nutrien ( NTR ).
As one of the world’s largest providers of crop inputs and services, Nutrien is firmly positioned even if the economy enters a major downturn. In the first nine months of 2022, the company generated a record net income of $6.6 billion.
Nutrien shares are up about 3% in 2022, in contrast to the S&P 500’s double-digit year-to-date decline.
Given the uncertainties facing the US economy, investing in agriculture can provide peace of mind to risk-averse investors.
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This article provides information only and should not be considered advice. It is provided without warranty of any kind.
