Portfolio Protection Strategy for an AI Market Crash

Rickards outlines a five-step action plan for the coming crisis. First, exit stocks most exposed to the AI fallout. Second, invest in assets that surge when AI collapses. Third, purchase what he calls disaster insurance that pays out more the greater the collapse, potentially returning 600% or more over 12 months. Fourth, hold physical gold. Fifth, prepare your home for potential civil unrest.

He emphasizes that this portfolio insurance strategy does not require shorting stocks or buying anything on margin. He also notes that he has invested over a million dollars of his own money in preparation for this kind of crisis. The specific tickers for each step are in the reports that come with the subscription.

The disaster insurance trade is the most intriguing element of Rickards’ strategy. He describes it as a position that pays out more the greater the collapse, potentially returning 600% or more over 12 months. Importantly, he says this does not require shorting stocks or buying anything on margin. Based on the description, it is likely some form of put options on AI-heavy indices or an inverse ETF.

Physical gold is Rickards’ number one safe-haven asset for the coming collapse. He argues that gold is guaranteed to go higher if AI stocks collapse, because it has historically risen during periods of financial crisis and market panic. During the dotcom crash, certain precious metals and commodities rose 80%. During the 2008 financial crisis, they rose 100%.

Rickards has invested over a million dollars of his own money in preparation for this crisis, with gold being a core component. His bonus report The Perfect Physical Gold Portfolio details his specific allocation strategy. The thesis is that when the AI bubble pops and trillions in market value evaporate, capital will flow into safe havens, and gold will be the primary beneficiary.

Some of the most successful investors in the world are already exiting AI stocks. Stanley Druckenmiller, who predicted the 2008 financial crisis, has sold all his Nvidia and Palantir shares. Peter Thiel, a techno-optimist and venture capitalist, sold his entire Nvidia stake. Michael Burry made a $1.1 billion bet against AI. Paul Tudor Jones has said this is so much more potentially explosive than 1999. Jeremy Grantham, who once managed over $118 billion in assets, stated: This is obviously a bubble. The probabilities it doesn’t bust are slim to none. Former SEC Chairman Gary Gensler said AI will be the center of the future financial crisis. Even Sam Altman has admitted: A lot of people are going to lose a phenomenal amount of money.

Rickards emphasizes that even investors not directly invested in AI stocks are at risk. He draws a parallel to 2008: “Even people who had never heard the term subprime mortgages had their portfolios decimated.” The systemic risk comes from data center bonds being bought by pension funds and retirement accounts, and from the S&P 500’s extreme concentration in AI stocks.

Rickards draws a direct line to the investors who profited from the 2008 crisis. Michael Burry pocketed $100 million personally while making his investors $700 million. Jamie Mai turned $110,000 into $80 million. John Paulson took home $4 billion personally from the trade, while his fund made $15 billion total. Bill Ackman took home a 10,000% return in just a few weeks during the Covid Crash. Rickards argues that getting ahead of a market crash is how some of the biggest fortunes in history have been built, and that his disaster insurance trade is designed to let ordinary investors do the same thing without shorting stocks or leveraging their accounts.

The AI Black Paper presentation promotes Strategic Intelligence, Rickards’ monthly newsletter from Paradigm Press. The price is $49 for 6 months, originally $299, an 83% discount that works out to about $8 per month. The guarantee is 3 months: subscribers can request a full refund for any reason within that window and keep all reports.

The package includes six months of Strategic Intelligence plus six special reports: AI Fallout (the biggest AI losers to remove from your portfolio immediately), The AI Black Paper Blueprint (his personal million-dollar roadmap), AI Meltdown Insurance (how to profit from the coming crash), Trump’s AI Arsenal (how investing in AI superweapons could turn $1,000 into $162,000), The Perfect Physical Gold Portfolio, and How to Make Your Home Your Personal Fortress.

Where to Learn More

For the complete analysis, read our AI Black Paper review covering Jim Rickards’ full thesis on the AI Minsky Moment.

For a gold-focused macro thesis, see our BTM Gold War review covering Dylan Jovine’s case for a third gold revaluation.

See our analysis of subprime AI debt for how data center bonds echo 2008.

Ready to explore Jim Rickards’ full research? Learn more about Strategic Intelligence here.

This is not financial advice. Always do your own research before investing.