Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
Will Labour Government Spending Bankrupt Britain? UK Debt and Deficits - 7th Dec 19
Lib Dem Fake Tory Election Leaflets - Sheffield Hallam General Election 2019 - 7th Dec 19
You Should Be Buying Gold Stocks Now - 6th Dec 19
The End of Apple Has Begun - 6th Dec 19
How Much Crude Oil Do You Unknowingly Eat? - 6th Dec 19
Labour vs Tory Manifesto Voter Bribes Impact on UK General Election Forecast - 6th Dec 19
Gold Price Forecast – Has the Recovery Finished? - 6th Dec 19
Precious Metals Ratio Charts - 6th Dec 19
Climate Emergency vs Labour Tree Felling Councils Reality - Sheffield General Election 2019 - 6th Dec 19
What Fake UK Unemployment Statistics Predict for General Election Result 2019 - 6th Dec 19
What UK CPI, RPI and REAL INFLATION Predict for General Election Result 2019 - 5th Dec 19
Supply Crunch Coming as Silver Miners Scale Back - 5th Dec 19
Gold Will Not Surpass Its 1980 Peak - 5th Dec 19
UK House Prices Most Accurate Predictor of UK General Elections - 2019 - 5th Dec 19
7 Year Cycles Can Be Powerful And Gold Just Started One - 5th Dec 19
Lib Dems Winning Election Leaflets War Against Labour - Sheffield Hallam 2019 - 5th Dec 19
Do you like to venture out? Test yourself and see what we propose for you - 5th Dec 19
Great Ways To Make Money Over Time - 5th Dec 19
Calculating Your Personal Cost If Stock, Bond and House Prices Return To Average - 4th Dec 19
Will Labour Government Plant More Tree's than Council's Like Sheffield Fell? - 4th Dec 19
What the UK Economy GDP Growth Rate Predicts for General Election 2019 - 4th Dec 19
Gold, Silver and Stock Market Big Picture: Seat Belts Tightened - 4th Dec 19
Online Presence: What You Need to Know About What Others Know About You - 4th Dec 19
New Company Tip: How To Turn Prospects into Customers with CRM Tech - 4th Dec 19
About To Relive The 2007 US Housing Market Real Estate Crash Again? - 3rd Dec 19
How Far Will Gold Reach Before the Upcoming Reversal? - 3rd Dec 19
Is The Current Stock Market Rally A True Valuation Rally or Euphoria? - 3rd Dec 19
Why Shale Oil Not Viable at $45WTI Anymore, OPEC Can Dictate Price Again - 3rd Dec 19
Lib Dem Election Dodgy Leaflets - Sheffield Hallam Battle General Election 2019 - 3rd Dec 19
Land Rover Discovery Sport Brake Pads Uneven Wear Dash Warning Message at 2mm Mark - 3rd Dec 19
The Rise and Evolution of Bitcoin - 3rd Dec 19
Virtual games and sport, which has one related to the other - 3rd Dec 19
The Narrative About Gold is Changing Again - 2nd Dec 19
Stock Market Liquidity & Volume Diminish – What Next? - 2nd Dec 19
A Complete Guide To Finding The Best CFD Broker - 2nd Dec 19
See You On The Dark Side Of The Moon - 2nd Dec 19
Will Lib Dems Win Sheffield Hallam From Labour? General Election 2019 - 2nd Dec 19
Stock Market Where Are We?  - 1st Dec 19
Will Labour's Insane Manifesto Spending Plans Bankrupt Britain? - 1st Dec 19
Labour vs Tory Manifesto Debt Fuelled Voter Bribes Impact on UK General Election - 30th Nov 19
Growing Inequality Unrest Threatens Mining Industry - 30th Nov 19
Conspiracy Theories Are Killing This Nation - 30th Nov 19
How to Clip a Budgies / Parakeets Wings, Cut / Trim Bird's Flight Feathers - 30th Nov 19
Hidden Failure of SIFI Banks - 29th Nov 19
Use the “Ferrari Pattern” to Predictably Make 431% with IPOs - 29th Nov 19
Tax-Loss Selling Drives Down Gold and Silver Junior Stock Prices - 29th Nov 19
We Are on the Brink of the Second Great Depression - 29th Nov 19
How to Spot REAL Amazon Black Friday Bargains and Avoid FAKE Sales - 29th Nov 19

Market Oracle FREE Newsletter

UK House prices predicting general election result

Stocks vs. Gold: Some Little-Known Facts

Commodities / Gold & Silver 2019 Jul 04, 2019 - 04:30 PM GMT

By: MoneyMetals

Commodities

The gold and silver markets rarely get much love on Wall Street and from the average investors who only listen attentively to what CNBC and stock brokers have to say.

Nearly a decade of underperformance in the metals markets certainly isn’t helping draw attention. Recently, the gold market started to move, and the rising price has thus far gone mostly unnoticed.

Everyone is watching the equity markets continue the surge higher that began the day after Christmas.


Investors who wonder how long the stock markets will continue to outperform gold ought to consider these little-known facts. They won’t be hearing them on TV or from their broker until after it is too late.

Gold Recently Began to Outperform Stocks

The equity markets just finished their best June in 80 years. That has been trumpeted everywhere in the financial press. The Dow Jones Industrial Average gained 7.2% for the month. That’s hard to beat, but at least one unloved asset managed to do it. Gold gained 8% in June.

It’s worth pointing out that gold has also dramatically outperformed gold in the longer term. The metals has roughly quadrupled in value since Jan. 1, 2000 when it traded at $285/oz. Compare that to the S&P 500 which is just slightly more than double its value at 1426 as we began the new century.

Yes, gold has had trouble relative to stocks if you only consider the past decade. But there is good reason to think the next decade will be very different indeed.

Central Banks Are Losing Control

One of the reasons gold performed so well in June is that the Fed is abandoning their plan to raise interest rates and most watchers now expect officials to begin lowering again at the end of this month.

Officials cut rates to zero in an effort to spur growth. The move certainly worked wonders to drive stock prices, but it apparently didn’t do much to build lasting economic strength.

Share prices began collapsing late last year when it appeared the stimulus would be withdrawn.

Investors should be asking why, if the economy is so strong, is the Fed getting ready to change course and start cutting rates. After all, the idea was that officials should step on the gas (lower rates) when the economy is weak, and hit the brakes (raise rates) when the economy recovers.

Instead of viewing interest rate policy as a set of car pedals, FOMC officials should have looked at it like a dangerous drug. The financial markets are now hopelessly addicted to cheap money.

Spineless Fed bankers now only see one real option, where they had planned to have two.

They will try to keep rates artificially low – most likely until the nation overdoses on debt.

Stock Prices are Rising on Declining Volume While Gold Prices Are Rising on Increasing Volume

Fewer investors are inclined to buy shares, though they have not yet decided to sell. Among the players still inclined to buy are Central Banks which granted themselves a mandate to intervene anywhere and everywhere they see fit following the 2008 financial crisis.

The current rally in stocks may well be totally driven by the combination of officials promising to lower rates and instructing their internal trading desks to buy shares whenever there is even a whiff of trouble.

We can’t say for certain this is the case because central banks are the opposite of open and accountable. However, this amount of strength in share prices coupled with extraordinarily low volume sure smells fishy.

Many investors have concluded the Fed and other central banks are propping up the equity markets and they are determined not to sell. However, as mentioned above, central bankers appear to be losing control.

Now might be a good time to prepare for the day when all control is lost, rather than waiting until after. Given the rising trading volume in gold, perhaps that is exactly what some people are doing.

By Clint Siegner

MoneyMetals.com

Clint Siegner is a Director at Money Metals Exchange, perhaps the nation's fastest-growing dealer of low-premium precious metals coins, rounds, and bars. Siegner, a graduate of Linfield College in Oregon, puts his experience in business management along with his passion for personal liberty, limited government, and honest money into the development of Money Metals' brand and reach. This includes writing extensively on the bullion markets and their intersection with policy and world affairs.

© 2019 Clint Siegner - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules