The Federal Reserve pledged support last Friday as the stock market took its worst weekly beating since the financial crisis. More than three million dollars in market value was wiped out in a week. But the DJIA did manage to close off its low. So when the market opened Monday morning and didn’t go into an immediate free fall, investors scurried in to buy stocks that had just given up more than twelve percent. The resulting dead cat bounce propelled stocks up nearly 1,300 points by the close. Today, the market started to go positive and then took a turn. As Trump all but demanded on Friday, the Fed stepped in to rescue the market with the good news of an interest rate reduction. Not a reduction of the typical quarter percent increment, but a full half percent instead. Normally the market would rally, but in the confusion it dropped to nearly a thousand points instead, before recovering enough to close out down only seven hundred and eighty-five points, giving back more than half of Monday’s rally.
Investors don’t seem to understand the fundamentals and ramifications of the brewing economic storm. The stock market’s volatility is simply due to the desperate actions of a great number of investors. Obviously, investors on the right side of volatility stand to make good money, but without a crystal ball, picking the correct stocks to buy or sell and the correct direction in order to make money, can be more than illusive, it can be catastrophic. Meanwhile, the dollar is down and the 10-year Treasury yield fell under one percent for the first time ever, another clear indication of recession.
When the market rallies, gold tends to travel in the opposite direction to a minor degree. Polls and pundits have been raving about the economy and the stock market since Trump was elected. But the simple fact of the matter is that the days of this long-in-the-tooth bull market are probably numbered. Since Trump took office on January 20, 2017, the DJIA is up twenty-six point four percent. But gold, which no one except central banks have paid attention to, is up twenty-five point nine percent over the same period. Now that coronavirus has tempered global growth, a recession is inevitable and market growth could be similarly tempered. And if community outbreaks continue to appear, then gold and other precious metals will only grow in demand, as well as their price.
Don’t become a casualty of the coming economic storm. Prepare by defending your portfolio, family, and legacy with the time-tested asset protection of gold and other precious metals. Gold is still more than thirteen percent below its all-time high and silver is more than sixty-four percent below its all-time high. Finding bargains like that in stocks is difficult, especially under current conditions. Call the experts at American Bullion (800) 653-GOLD (4653). Call now!
Although the information in this commentary has been obtained from sources believed to be reliable, American Bullion does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice. American Bullion will not be liable for any errors or omissions in this information nor for the availability of this information. All content provided on this blog is for informational purposes only and should not be used to make buy or sell decisions for any type of precious metals.