by Marin Katusa, International Man:

“Hoping for the best, prepared for the worst, and unsurprised by anything in between.”

Maya Angelou, from I Know Why the Caged Bird Sings

An engineer is trained through university and in the workforce to apply failure modes and safety factors into their designs. It doesn’t matter if it’s a structure, a circuit, a chemical, or even mechanical equipment.

Running a business is no different.

Restaurants that only offered dine-in service quickly learned that revenue stream was dust during this shutdown post-virus quarantine.

Only those who were ready with online takeout and delivery options continued earning revenue.

The stoic philosopher Seneca wrote, “What catches us by surprise hurts us double.”

If your favorite mining stock has significant production in what I call “negative swap nations,” it could be at serious risk.

I’ve talked to several gold company CEOs and gold fund managers.

Not one knew what a swap line was, nor the difference between a positive swap line nation and a negative swap line nation. As I walked them through my concept, all agreed that the risk factors would soon become impossible to ignore.

Are there built-in risk premiums to the prices of certain stocks?

Yes. But not at the cost of creeping government ownership and eventual nationalization.

The Latin phrase Premeditatio Malorum tells you to prepare for all evils.

And today, I’m going to get you up to speed on the overlooked risks to some of your biggest gold holdings.

I’m not making any friends with this theory, but I must prepare my portfolio for the risks.

If you have a producing asset in a negative swap Line (–swap) country, you must prepare for potential setbacks.

It’s about properly understanding and pricing in risk, something that has become overlooked in the resource sector.

The Importance of Dollar Swap Lines

A swap line provides temporary U.S. dollar relief to the central banks of certain nations (pre-approved by the U.S.) who need these financial lifelines to ease the stress caused by a lack of U.S. dollars in their own nation.

Swap lines are increasing weekly, and more nations will be added.

They will be added only if the nation needing the swap line agrees to the terms of the U.S. government—both financially and geopolitically.

Make no mistake, and don’t listen to the dollar demise crowd. The world still needs more U.S. dollars right now.

We’ll see countries declare bankruptcies, and we’ll see nationalization of assets.

• The International Monetary Fund (IMF) said in March that the global US dollar shortage could cripple many emerging markets.


• The IMF will be giving unsecured loans (in US dollars) to their most reliable members.

Below is a list of countries where US Federal Reserve swap lines exist—think of them as the US Federal Reserve’s lifelines. I call these positive swap line nations (+ swap).

Is it just coincidence that these are allies of the United States?

No.

Which Countries Do Not Have Swap Lines?

Countries not listed above do not have swap lines.

So, why am I focusing on swap lines?

It’s because I believe that nations with existing swap lines won’t screw with foreign operating entities (American companies) the way countries without swap lines do.

I still expect higher taxes in all countries as these are the only thing politicians across the world have executed effectively throughout time.

This means mining assets in positive swap line nations won’t nationalize their gold mines, copper mines, etc. Those nations won’t screw with America.

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