In September, the closely watched Gold ETF inflows set new records as investors watch unprecedented money creation and stimulus programs attempt to stem the financial damage of the Covid 19 Pandemic shutdowns. Safe haven investing in Gold has driven up Gold prices 21.86% to date— and demand is growing.
Fear of a Fall-Winter second wave of the pandemic, fear of more shutdowns, fear of changing political leaders, and fear of inflation are growing daily.
Inflation expectations continue to support Gold. But its still early for most people to jump on Gold for inflation fears… but they will be avid buyers the moment they get a whiff of inflation.
Is $6 Trillion Dollars of U.S. Stimulus Enough?
To us, inflation looks pretty certain right now. The U.S. is $6 Trillion Dollars into fighting Covid 19 already. You let Congress dump another $2 Trillion Dollars worth of stimulus programs into the problem and inflation is guaranteed to be a problem.
Milton Friedman famously said, “Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output.”
The Washington Post headline tells the story—
Gold bullion is up 21.86% so far this year as forward-looking investors look beyond just the Federal Reserve and Congressional spending. Worries persist about central bank stimulus worldwide to revive economies. This is while the second wave of Covid 19 washes across Europe with Ireland set to closedown their economy again.
It’s a fact— there’s a massive amount of FAKE MONEY being dumped into the world economy. This experiment in money printing is attempting to replace the economic losses from the Covid 19 Pandemic by just creating money and giving money away. It may or may not succeed short-term.
Warning: The long-term consequences of major nations injecting fake money on this scale may be shocking. It’s an experiment, it’s very risky, it’s unprecedented, and it will I mpact the value of every investment you own— eventually.
We have been a businessman working in a free market economy all our life. We learned that an efficient allocation of resources occurs when we produce goods and services people value most highly.
This is also true of money creation. What’s money worth when you just print it and give it away? If you create massive amounts of money and give it away, you are not stimulating the free market economy, you are replacing it. That’s one giant step toward Socialism.
Forward thinkers are locking away a little Gold already this year— enough to drive up the Gold price by 21.86%. Today, Gold is viewed as a hedge against inflation and a safe haven asset during the current economic and political uncertainties. But there’s more to it.
Gold Mania Ahead
We believe we will shortly see a mania in Gold. It won’t be just Gold bugs in the United States, it will be a Gold rush worldwide.
According to the latest from the World Gold Council, total ETF holdings worldwide rose for a tenth consecutive month in September, surpassing the 1,000-tonne mark for the first time ever in a calendar year.
Today, buying comes from some investor speculation, no doubt. But, big money institutional investors are leading the parade. They saw the March Stock Crash just like you did. They’ve watched some $6 Trillion Dollars of U.S. Government and Federal Reserve money thrown into the Covid 19 Pandemic financial problem— and they see limited results and more volatility ahead.
Physical Gold Insurance Plus 21.86% Gains
Many of us think of Gold as insurance against downside risk due to the uncertainty that lies ahead. One look at this chart shows Gold is a huge offensive weapon to growth your wealth. This year’s Gold gains of 21.86% are only exceeded by the NASDAQ. The S&P 500 gains of 7% pale when compared to Gold.
We’re Looking Forward to 2021
Gold has made great gains in 2020. But, building impatience and precariousness makes the 2021 outlook for Gold even stronger.
We feel uncertainty will grow as winter approaches— flu viruses are always worse in winter. The Spanish Flu of 1918-1920 came in four waves. The second wave of the 1918 pandemic arrived in Fall-Winter and was much more deadly than the first wave. We pray that won’t be the case in the coming months— but we should expect it.
If Covid 19 cases tick up again this Fall and require a second wave of shutdowns, no amount of stimulus will prevent the ensuing economic damage. The accumulation of failed small businesses and bankruptcies will only have a domino effect with high unemployment echoing through a stagnant or shrinking world economy.
Eventually, world Stock Markets will concede that a Great Depression may be a distinct possibility. That’s subject to the stimulus programs failing or timeliness of vaccines not living up to optimistic expectations. There are 7.8 Billion people on the planet, it will take far beyond 2021 to vaccinate even half of us. Can Stock prices hold up till then? I don’t think so.
Put away some Gold for a rainy day, the clouds are gathering. Be patient. Hope for the best, plan for the worse.