It is clear that stocks have outperformed Gold significantly during the recent stock market boom. Driven primarily by High Tech darlings many Stock are simply illogical, unexplainably overpriced— yet they may go even higher.
What has been overlooked is the stupendous rise in Gold prices.
A soaring Gold price has taken less than two years to go from $1,200 to an all-time high of $1,974 an ounce. A quick 60% rise is typically the way the Gold market explodes out of the duldrums.
Nothing Like a Worldwide Crisis to Drive Up Gold Prices
While the Covid19 pandemic has destroyed millions of lives and decimated small businesses, restaurants, hair salons, airlines, hotels, and luxury travel. Few businesses have been spared. In the early stages, U.S Stocks took a hard dive, then suddenly recovered. Then Stocks kept on going up as if it was all a bad dream.
I wonder, “Are many investors living in denial— denial of the true reality of this crisis?” As I studied our situation, maybe we’re In the 7 Stages of Grief. Denial can be helpful in giving us time to absorb the shock of loss, but we all must go forward.
The 7 Stages of Grief
- Shock and denial. This is a state of disbelief and numbed feelings.
- Pain and guilt. …
- Anger and bargaining. …
- Depression. …
- The upward turn. …
- Reconstruction and working through. …
- Acceptance and hope.
Any grief counselor will tell you, it all takes time to process loss. After some sobering research, we now believe the on-going pandemic will impact American lives, our families, our work, and corporate profits for years, well through 2021.
Reality check: Both employees and businesses who survive going broke will simply never be able to make up the lost wages, lost income, lost profits, and lost time in the Covid19 pandemic..
Coming Soon — A Watershed Moment for Stocks
Here’s what we now believe— The Economic recovery is unlikely to be V shaped, maybe a double dip W over a year, but most likely an L shape recovery of undeterminable length.
It is in the arrival of this reality that we feel investors will come to a watershed moment in history— a panic on Wall Street that pales the 2008 crash. There’s still time to take out some financial insurance. Before Stocks have even stumped their toes, we already see that in more and more conservative circles, Wall Street is changing its views on Gold.
Clearly A Time for Gold
It’s taken a while, but just as we predicted in the May 2018 Austin Report…
“If the gold momentum persists and we break out above $1,350, we could see Wall Street starting to be bullish on gold again.”
Gold Is Absolutely on a Bull Market Run
Many individual investors are worried about the fragility of the U.S. economy and the uncertainty of putting all your eggs in one investment basket. Too often in recent years that’s been the approach, concentrating a 401k, IRA or retirement savings all-in on Stocks. For many, that will be the biggest mistake of their lifetimes.
Goldman Sachs Has Been Strongly Recommending Gold
“We have long argued that Gold is the currency of last resort, acting as a hedge against currency debasement when policymakers act to accommodate shocks such as the one being experienced now,” said Jeffrey Currie, head of commodities at Goldman Sachs.
As well as being seen as a hedge against all kinds of market volatility, gold is viewed by many investors as a way to protect themselves from the debasement of currencies and also inflation. “It’s just like in 2008 and 2009 when governments and central banks turned the printing press on full speed,” said John Ciampaglia, chief executive of Sprott Asset Management.
The Austin Report Recommends a Core Holding of Precious Metals
For decades, we have urged our Austin Report readers to hold a variety of investments including precious metals. We argued that in both the 2000 Stock Crash and again in 2008, a balanced and diversified Stock portfolio holding only Stocks could not survive well.
In these times of Stock volatility amidst a lingering pandemic, even greater care should be taken. We continue to urge readers to stash away Gold Bullion Coins and Silver Dollars with a portion of the profits you may have generated lately.
In our opinion, cash, precious metals, and in the past, bonds were all needed for safety, security, and avoiding a total disaster in Stock Market crashes. We feel common sense alone requires savings that are shock proof… or at the very least, less risky and let us sleep better at night.
Switching out of risky assets at key moments in time could make all the difference in avoiding losses and preserving profits for a lifetime.