“They Can Go Find Another Sucker”

Step aside, China. You’re not the only one in Trump’s tariff crosshairs.

Our president-elect has put a tariff target on the BRIC countries as well, threatening to impose 100% tariffs on those poor buggers as well if they continue to attempt their move away from the dollar.

In true Trump form, he said:

“They can go find another sucker.”

But who actually pays for the tariffs? 

That’s where the plot thickens. Tariffs generally lead to higher prices and fewer options for consumers. So if the tariffs threats are realized, we’re looking at inflation coming back hard.

So, that little uptick in PCE inflation last month might be just the beginning. Expect it to really ramp up again as tariff hikes start flowing through to grocery bills.

We have a choice. We can whine about higher prices… or we can protect ourselves and even profit from them.

We are already well positioned in our Freeport Investor model portfolio. All five of our hedges are showing gains. One is up more than 128%. Another is up more than 48%.

And they’re not the only investments in that model portfolio doing well. You can learn more here.

But, there is still plenty of room to add to your investment mix to prepare for the incoming tariffs. That’s why I sat down with fellow investment strategist and editor of Freeport Strategic Opportunities, John Pangere.

John is a warrants expert, and a history buff to boot. Hearing what he has to say is always interesting and useful.

Watch today’s special edition of The Freeport Navigator to hear what John and I believe are the best investments to consider before January 19, 2025.

Click on the play button below to watch now.

To life, liberty, and the pursuit of wealth.

---

P.S. As investors, we have a smorgasbord of investment tools at our disposal to help us grow our wealth. Cryptocurrencies. Commodities. ETFs. Securities. Warrants. Options. And that’s just to list a few. Sure, it takes years of immersion and skill to master trading or investing in any or all of those. Or, you could turn to people who’ve done all the hard work already. John’s my go-to warrants guy. Jonathan Rose is my go-to options guy. He’s a master of his craft and he recently unveiled his zero-day-to-expiration options strategy. He explains how it works here.

---

Transcript

Charles Sizemore: Hello, Freeport Society. This is Charles Sizemore, chief investment strategist, and you are in for a treat because, today, I have Mr. John Pangere, Editor of Freeport Strategic Opportunities.

John, welcome.

John Pangere: Hi, Charles. How are you?

Charles Sizemore: Doing well. So, of course, tariffs are in the news right now. That was a major plank of Donald Trump’s campaign, and he has promised to put on some of the biggest tariffs we’ve seen in decades. 10 to 20% just across the board, up to 60% in China – maybe more even – 200% or more specifically on cars imported from Mexico, and the list goes on and on, so this is a big deal. It is a major deviation from the last several decades of policy.

We’ve emphasized in The Freeport Navigator and elsewhere that this could be inflationary. It likely is because tariffs are, in effect, a tax on imports that tends to flow through to consumers.

I’ve argued there’s kind of two parts to that. There’s the immediate sticker shock where, oh, imported goods are instantly more expensive. You notice that right off the bat. But then there’s also the longer term effect of just diminished productivity. If everything becomes a little bit more expensive and without the fire under them to stay competitive – that foreign competition that keeps them hungry, companies do what companies do, they tend to get fat and lazy – and they lose some of that competitive edge. That’s the beauty of competitive capitalism. It keeps you on your toes.

So, you have a different take on this. You and I were talking offline, and you’re pointing more to effects that the dollar will have on inflation to make from all this. Why don’t you walk us through all that?

John Pangere: Yeah. So, I think, just looking out and seeing before the election, I should say, there’s really two things you were looking at.

One, you had Trump with the tariffs, and you had Harris with, basically, more of the same spending. Which they work the same way. Right? The effects will pretty much be the same. Tariffs can work, but, and we talked about this, you have to have a lot of these different conditions that we just don’t have right now.

So, if you look historically even going back to the Industrial Revolution, there were excise taxes on things that were imported into the country, but there were also no income taxes. You didn’t have this massive blob of the government of millions of employees, things like that. You can’t just get rid of those things today and say, “Well, we’ll just fund the government through tariffs.” It doesn’t work that way right now.

Charles Sizemore: The math would be challenging because, to replace the income tax, you’d have to have tariffs of probably a couple of thousand percent. And then if you had a couple of thousand percent tariffs, imports would just go to zero, and your income, the government’s income, would go to zero because there would be no tariffs.

John Pangere: Right. Yeah, I mean you really have to cut things to the bare bone. And it takes time to do that. Even if we had 20 years, I don’t think we could do that, so trying to do it anywhere from two to four years just probably isn’t feasible.

Looking at things right now, obviously at this point the dollar is just taking off. It took off right after the election. I think it’s more of like a honeymoon period. We had this decisive election and people weren’t really prepared for that. I think they were looking for something that was going to be long and drawn out. Maybe that’s better that we don’t have something long and drawn out.

Charles Sizemore: It’s better that we didn’t have literal or metaphorical blood in the streets. I was concerned about that, not metaphorical blood in the streets, actual blood in the streets.

John Pangere: Right.

Charles Sizemore: And, thankfully, that did not happen.

John Pangere: Yeah. So, I think people looked at that and said, “Oh, great. Now, we can move on.” And so, then there was this surge in almost every asset class, except for gold, but we’ll come back to that.

Charles Sizemore: And bonds.

John Pangere: As far as with the dollar, sure, it’s going to have these periods of strength and periods of weakness, but if you look at long-term it’s just perpetually declining. And I think that’s going to continue, and especially if this incoming Trump administration wants to do the things that they’ve said on the campaign trail, they’re going to have to trash the dollar to do it.

Charles Sizemore: Now, that’s a good point, John. Let’s take a break there.

The things that the Trump administration wants to do such as lowering taxes, such as lowering corporate taxes, is that what you’re talking about as well?

John Pangere: Well, in the sense more so of bringing manufacturing back. We’re not competitive in most cases in manufacturing. That’s why we’re able to get cheap goods from China or Vietnam or all these other countries that have really low cost of labor. We have much higher cost of labor.

Well, if you want to bring the manufacturing back, you’re going to have to pay for it. How do you do that? You basically have to devalue the dollar in order to make it more of an incentive for companies to open factories here and say, “Yeah, we can build things there close to whatever the cost is where we’re building them overseas.” So that’s one of the things.

Charles Sizemore: You have a good point, John. Let’s go a little bit more into detail on that because currency movements are not something that’s really even in the conversation when we’re talking about tariffs and the implications for imports. But currencies matter too. Because if the dollar is weaker, then all imported goods automatically get more expensive. If the dollar is stronger, all imported goods automatically get cheaper. So that’s sort of like a tariff on top of the tariff if the dollar goes lower.

John Pangere: Yeah, you can kind of say that. I mean, in my past I traded currencies, so I’ve seen all these fluctuations and how they can affect the flow of goods going back and forth between different countries, and you really have to get into it when you’re trading that type of security.

So I think really the only way out of this whole mess, or what Trump wants to do essentially, is you have to trash the dollar. Even JD Vance, on the campaign trail, he was saying the same thing basically, “We have to devalue the dollar,” so I think that’s an imminent thing that’s going to happen, and that’s kind of setting up how you’re going to allocate your portfolio at least in the short term for most people. And it’s something that we have to think about.

Charles Sizemore: What’s your timeline for that? When do you think we’re going to see the effects on the dollar?

Right now, of course, the dollar is very strong. It’s actually been strengthening since the election. Part of that I think is also an interest rate issue. If you believe the Fed’s going to go slower in cutting rates now, then, all else equal, that means temporary strength for the dollar. What’s your timeline on that?

John Pangere: That’s the toughest part of it. I don’t think it’s going to be any time in the next couple of months. You will start to see the dollar roll over. But there’s one wild card, and that is the wars that are currently going on overseas.

You started to see the dollar tick back a little bit, until Ukraine launched some missiles into Russia and then everybody’s like, “Oh, we got to go back into safe havens.” So you saw the dollar go up. You saw gold go up. Bitcoin’s been on a tear. People are looking at those as safe havens and saying, “If we have this conflict escalating, then we need to get back into the things that we see as safe.” That’s kind of a wild card. I think we will see temperature come down on that.

Probably, going into the next year and through the first half of the year, you’ll probably start seeing the dollar roll over again and, as Trump gets inaugurated and they start implementing these policies, then we’ll really start seeing the action come into play, and this little honeymoon period that we’re in will be over.

Charles Sizemore: You had a quote when we were talking offline that cracked me up because it’s straight out of The Sun Also Rises, my favorite Ernest Hemingway book. You said the dollar’s demise will be gradual and then sudden. You care to elaborate on that a little?

John Pangere: Well, just looking at the chart right now, it’s typically slow to react. Things are typically slow to react, whether it’s the dollar. Whether it’s inflation, it catches people off guard when the actual move happens. So that’s why I always like to say even with my readers at Strategic Opportunities, I say things happen slowly at first then all of a sudden, and it doesn’t matter whether it’s the dollar, whether it’s security that you’re trading. That’s just how things happen.

Charles Sizemore: There’s a tipping point. It’s slow and then, all of a sudden, it snowballs and it gets fast in a hurry. That’s how inflation was in this last surge, the one that started towards the end of the pandemic. It started slow and then exploded higher, so that seems to be how it works in the real world now.

John Pangere: Yeah, and I think you’re going to see the same thing with inflation in the next several years, too. You’re having this… It’s not actually deflation. I think there’s a confusion there that we’re actually seeing prices come down, but really they’re just going up at a slower rate.

Charles Sizemore: Yes. When people hear, “Inflation is falling,” they think, “Oh, that means my grocery bill is going to be less.” No. Your grocery bill is actually going to be more. It’s just going to be growing at a slower rate than it did before.

John Pangere: Right.

Charles Sizemore: Deflation just… Well, it does happen, but that’s not in the cards right now.

John Pangere: Right. I think we’re going to see both of these things happen gradually around the same time. You’re going to start to see the dollar taper off. You might start seeing that lag a bit in inflation and the inflation numbers coming up, but I think we’re in for another bout of inflation maybe in the next two, three years. It’s going to take some time, but it’s going to catch people off guard just like it always does. Basically, it is going to happen with those two things working against each other at the same time.

Charles Sizemore: What I think will be interesting, and we won’t know this for a few months, but if you’re company X, company Y, company Z, whatever, if you’re just any major American company and that tariffs are very likely coming, you’re going to pre-buy everything you can now to get in front of the tariffs.

I think it will be interesting to see what effect that has on prices in the last quarter of this year, the first quarter of next year, this almost panic buying you see, companies trying to get in front of the tariffs. We won’t know for a few months, but that’ll be interesting. Either way, that’ll be interesting.

John Pangere: Yeah.

Charles Sizemore: Let’s talk about how to navigate all this. So, in The Freeport Society, we’re sort of natural gold bugs. We’re not crazy about it. We don’t suggest you liquidate everything and bury gold in your backyard, but we do believe that gold should be part of your portfolio. It’s a natural inflation hedge. It’s a natural dollar hedge. We’re also big fans of Bitcoin and other cryptocurrencies for really much the same reason. Apart from that, what other angles do you see?

John Pangere: I think there’s really two ways to look at this. And I think the first is, if you’re looking at what your core portfolio is, these are positions that you’re talking about holding for decades, then it probably doesn’t really matter. These are companies that you probably have whatever dividends that they’re paying and you’re reinvesting and it’s just compounding over time, your really solid companies that are out there that-

Charles Sizemore: Well, those good companies that have proven… If it’s a company with a long track record, then they’ve proven their ability to navigate inflation in the past. They’ve proven their ability to navigate deflation. They’ve proven their ability to really navigate anything. So, I would tend to agree with you on that.

John Pangere: Right. I don’t think there’s that much of a concern with those unless there’s something fundamentally wrong with the company itself, and that’s just a different discussion.

But when it comes to short-term trading, if you’re looking to speculate, then you really have to focus on what these trends are that you can see coming or you see happening and then try to position for those trends.

It’s kind of what we do in Strategic Opportunities. It’s a more speculative place that we’re looking for. And we utilize stock warrants. which I know a lot of people don’t know what those are. We probably have to have another discussion on exactly what warrants are.

Charles Sizemore: Warrants are the one.

John Pangere: Right. But these are plays that can get you leverage to a specific trend and, really, a specific company itself. When it comes to what’s happening right now, it’s positioning for things like commodities, whether that’s precious metals like gold and silver. Even in the oil space, when you start seeing the dollar come down, you’ll probably see energy prices go up too. That typically happens all the time.

Charles Sizemore: Sure. Energy is priced in dollars. So, if dollars go down by virtue of being priced in dollars, everything else goes up.

John Pangere: Pretty much. You’re really looking at a lot of these old-world type of businesses. Whether that’s in mining or whether that’s in oil and gas, or steel making, or even Bitcoin, there are ways to speculate on companies that have direct access or direct connection to Bitcoin where you can get some leverage to those moves. So those are the types of things we’re looking at.

I can give you, even in the past, specific examples of how we’ve traded these trends. For instance, I don’t know if you remember back, I think it was, in 2021 or 2020, 2021. Remember when oil went negative?

Charles Sizemore: I do. That was crazy.

John Pangere: Yeah. At that point, people were like, “Oh, this is the death of oil.” Everybody was saying, “It’s the death of oil. Oil is done. We’re going to solar. We’re going to wind. We’re going to all these things.” But, if you actually took a step back and looked and said, “Well, everything pretty much still runs on oil, plastic…”

Charles Sizemore: And that doesn’t burn on the dime.

John Pangere: Yeah. It’s literally everything you have in your house. Everything you use still needs oil in some form or another, so saying it was a death of oil, I would say, was naive.

Charles Sizemore: Hyperbolic.

John Pangere: Yeah. There were a lot of opportunities out there to jump back into the oil trade, and one of them was Occidental Petroleum (OXY). So, during that time, a lot of these oil companies suspended their dividends, and they just needed to conserve the cash. It’s not that they were bad companies.

Charles Sizemore: It was an emergency.

John Pangere: Exactly.

Charles Sizemore: You’ve never seen negative oil prices before for crying out loud. Yeah.

John Pangere: Right. I looked around, and I’m like, “Okay, there’s ways to play this.” And what Occidental Petroleum did is, really, at the urging of Carl Icahn, who forced his way on the board at that point, was they issued stock warrants. Basically, in lieu of a dividend, they issued warrants that had a specific expiration date, you can buy the stock up to a certain price over the next five years. And those traded on an exchange so anybody can buy and sell them.

Well, I recommended those to our readers at, I think, it was $2.95 cents per warrant. Within a couple of years, we closed them out for about a 14x gain. Just because the trend in oil was clearly up. And the stock over that time did only about a 500% return, so we got a lot of leverage to that.

Charles Sizemore:

You guys were greedy when others were fearful.

John Pangere: Exactly. It’s not limited to those things, too. Even back during the lockdowns and during the Covid boom years of the market, everybody was jumping out of oil and jumping into electric vehicles. We did the same thing there. It was a shorter window, obviously.

But there was a company called Blink Charging (BLNK). Well, if you have all these EVs on the road, you need charging stations. Well, they just happened to be one of the companies that was making these charging stations and recommended the warrants to our subscribers. Now, we did sit through some pain. They did draw down about 80% or so while we held them, but then we still cashed out with a 29x gain.

Charles Sizemore: Twenty-nine times? Wow.

John Pangere: Twenty-nine times after an 80% drawdown. Now, I should say some of these returns are not normal. You have to really manage your risk when it comes to these types of positions, and you really have to pay attention to what’s going on.

Charles Sizemore: The usual caveat should apply. This is not what your mortgage payment money.

John Pangere: Exactly. We tell our readers, “Don’t bet more than you can afford to lose on these types of speculations.” But, really, the point is that, so long as there’s a trend in place…

Charles Sizemore: By the way, you can take a lot of losses along the way for the occasional 29-time gain. That erases a lot of losses.

John Pangere: Mm-hmm. Oh, yeah. I mean, you can expect to have losses in these types of trades. That’s a given. You have to have the mindset to say, “Okay, I’m willing to lose a little bit of money to make a much, much larger score on whatever security I buy later on.”

Charles Sizemore: If you probably think of a sports analogy, it would be like, “I’m willing to miss a few base hits in order to hit one massive grand slam that goes out of the stadium and into the parking lot and then keeps rolling into the next city.”

John Pangere: Yeah. Well, I mean, you can even take that and say, “Look, one of the greatest hitters of all time is Ted Williams, and he didn’t even hit the ball 50% of the time.”

Charles Sizemore: Right.

John Pangere: Now, as far as what we’re trying to do, it’s really just positioning for those trends. So what the trend saying right now, just kind of bringing it back, I think we’re going to see dollar down, inflation up. We want to buy into those types of things that are going to end up being able to have nice gains in the future based on those two premises.

And what is that? That’s commodities. That’s your old-world type of businesses, things like that that just, in those harder times when it comes to inflation, are actually going to do well.

Charles Sizemore: I agree. That’s completely in line with Freeport Investor, Freeport Alpha, and the rest of Freeport crew here. That’s how we play that.

So, to summarize for everybody watching this, we do think inflation is likely coming. We think that inflation is going to be due to a host of factors, not the least of which is a significant depreciation in the dollar.

That’s something that’s being championed right now politically. And, usually, when politicians promise something, you should take it with a grain of salt, except when they promise to trash the dollar. They’re probably serious about that one. That’s one that they can seem to actually do, so we have to prepare for that in terms of how do you manage your portfolio. You don’t need to dump everything and run for the hills. If you have quality stuff, keep it. Quality companies have a way of surviving and thriving no matter what, but keep a chunk of your portfolio, keep some piece of it open for really good opportunities in speculative trades that really profit from these trends. That sum it up?

John Pangere: Pretty much. I mean, if you have a small percentage allocation of your portfolio set aside for these speculative trades, if you do it right and you make these small bets, overall, if you lose on those small bets, they’re not going to hurt your portfolio’s performance for the most part. But if you hit big on one of them, it will affect your return at the end of the year.

So, as long as you can do that and you keep your head above water and, in the meantime, watch to see where these trends are going, then I think you’ll do pretty good in the long term.

Charles Sizemore: Well said.

Well, John, I think that’s going to wrap it up. Thanks for joining me today. And thanks to everybody viewing.

To life, liberty and the pursuit of wealth, this is Charles Sizemore signing off.