Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24
How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - 17th Feb 24
Why Rising Shipping Costs Won't Cause Inflation - 17th Feb 24
Intensive 6 Week Stock Market Elliott Wave Training Course - 17th Feb 24
INFLATION and the Stock Market Trend - 17th Feb 24
GameStop (GME): 88% Shellacking Yet No Lesson Learned - 17th Feb 24
Nick Millican Explains Real Estate Investment in a Changing World - 17th Feb 24
US Stock Market Addicted to Deficit Spending - 7th Feb 24
Stocks Bull Market Commands It All For Now - 7th Feb 24
Financial Markets Narrative Nonsense - 7th Feb 24
Gold Price Long-Term Outlook Could Not Look Better - 7th Feb 24
Stock Market QE4EVER - 7th Feb 24
Learn How to Accumulate and Distribute (Trim) Stock Positions to Maximise Profits - Investing 101 - 5th Feb 24
US Exponential Budget Deficit - 5th Feb 24
Gold Tipping Points That Investors Shouldn’t Miss - 5th Feb 24
Banking Crisis Quietly Brewing - 5th Feb 24
Stock Market Major Market lows by Calendar Month - 4th Feb 24
Gold Price’s Rally is Normal, but Is It Really Bullish? - 4th Feb 24
More Problems in US Regional Banking System: Where There's Fire There's Smoke - 4th Feb 24
New Hints of US Election Year Market Interventions & Turmoil - 4th Feb 24
Watch Consumer Spending to Know When the Fed Will Cut Interest Rates - 4th Feb 24
STOCK MARKET DISCOUNTING EVENTS BIG PICTURE - 31st Jan 24
Blue Skies Ahead As Stock Market Is Expected To Continue Much Higher - 31st Jan 24
What the Stock Market "Fear Index" VIX May Be Signaling - 31st Jan 24
Stock Market Trend Forecast Review - 31st Jan 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

These Are the Times That Call for Gold

Commodities / Gold & Silver 2020 Jul 07, 2020 - 04:37 PM GMT

By: MoneyMetals

Commodities

As third quarter trading kicks off following a tumultuous first half of the year, investors are hoping for an auspicious July.

Both stocks and precious metals posted impressive advances in the second quarter. The S&P 500 finished the April-June period with a gain of nearly 20%, its best quarterly performance since 1998. The Dow Jones Industrials, meanwhile, posted its best quarter since 1987.

It’s worth noting that in 1998 – and more famously in 1987 – the stock market also suffered a sharp 20%+ decline during the second half of the year.


In a volatile trading environment for equities, a big move in one direction tends to beget a big move in the other. We’ve already seen a big move lower earlier this year – and a subsequent move higher that was nearly equal in magnitude.

The bull run has seen the shares of leading tech giants, including Amazon, Apple, and Microsoft, hit new all-time highs. Smaller brick-and-mortar companies tied more directly to the fortunes of the real economy haven’t fared so well.

The question going forward is whether the broad stock market will correct to reflect a hollowed-out economy that remains partially locked down… or whether stocks will continue to move higher in response to artificial fiscal and monetary stimulus.

Until the Chinese virus stops spreading (and politicians stop constricting economic activity in response), we will likely see the above-mentioned divergences persist and market volatility remain heightened.

Conventional fundamental analysis should be thrown out the window.

In this environment, it is quite possible that Wall Street will be celebrating the S&P 500 hitting a new record in the second half of 2020 at the same time as economic misery on Main Street hits a new low – and major U.S. cities descend into chaos amid violent protests and de-policing.

These are strange and scary times. While investors can hope for a return to normalcy in the months ahead, they shouldn’t count on it.

“These are the times that try men’s souls,” wrote American Revolutionary Thomas Paine (“The American Crisis,” December 19, 1776). He added, “Tyranny, like hell, is not easily conquered; yet we have this consolation with us, that the harder the conflict, the more glorious the triumph.”

In order for investors to triumph during a period characterized by a deadly pandemic, economic despair, unhinged markets, unlimited Quantitative Easing, social unrest, and deepening divisions, they need to be prepared for the next big shoe to drop. A crisis in the U.S. banking or political system – or in the U.S. dollar itself – could be coming.

These are the times that call for gold (and silver). Owning financial insurance may never have been more important.

Gold and silver markets racked up impressive gains of their own in the second quarter. Gold in particular finished on a high note – closing Tuesday at $1,789, its highest level since 2012.

If gold’s recent upside breakout garners immediate follow through, a new all-time record high may be only a few days away.

Gold is up 18% year to date, far outperforming the stock market. Despite rallying strongly off its lows, the Dow is still down 9% for 2020. The tech-heavy Nasdaq is up 12% for the year, but even it is underperforming gold.

Regardless of whether artificial stimulus injections propel stock market averages higher in nominal U.S. dollar terms, they could continue to lose value in terms of sound money (gold and silver).

When economic and political fears are running high and the Federal Reserve’s printing press is running on overdrive, that combination is like rocket fuel for precious metals markets.

To quote Thomas Paine once again, “What we obtain too cheap, we esteem too lightly.”

A flood of Federal Reserve Notes pumped into the banking system, the Treasury bond market, the junk bond market, and directly into Americans’ pockets through “stimulus” checks is cheapening the value of the currency and severing the link between economic productivity (i.e., work) and reward.

It’s much harder to mine gold or silver out of the ground than it is to expand the supply of fiat currency.

That makes hard money less convenient from the standpoint of politicians and bankers. But it also ensures that, unlike paper or digital representations of money, gold and silver coins will always be esteemed for their intrinsic value.

Stefan Gleason is President of Money Metals Exchange, the national precious metals company named 2015 "Dealer of the Year" in the United States by an independent global ratings group. A graduate of the University of Florida, Gleason is a seasoned business leader, investor, political strategist, and grassroots activist. Gleason has frequently appeared on national television networks such as CNN, FoxNews, and CNBC, and his writings have appeared in hundreds of publications such as the Wall Street Journal, Detroit News, Washington Times, and National Review.

© 2020 Stefan Gleason - 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.


© 2005-2022 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