With gold still more than 10% below its all-time high, many investors are scrambling into greater positions within the precious metals market. Today’s nearly 7% DJIA one-day decline is forcing investors to realize that there really is no valid reason for the stock market to resume any type of sustained bullish rally. COVID-19 isn’t being universally respected and many Americans are paying the ultimate price. Many states and counties that have jumped into the “re-opening” mindset, unfortunately, many of them didn’t take appropriate initial actions and are therefore seeing huge increases in infection rates, as hospitals are quickly becoming overwhelmed. That’s the headline being used to explain today’s downturn and a continued blind reopening is sure to slow any potential recovery.
But what about Fed Chairman Powell’s warning today, that the country’s economic recovery may take a number of years? And what about the fact that before the March collapse, a great deal of the stock market’s long rise was a direct result of public companies borrowing cheap Fed money so they could buy back company stock and artificially inflate stock values in order to qualify for executive bonuses, but leaving the company in debt and incapable of true growth. Not to mention the fact that we’re still looking at an unemployment rate greater than 10% and ongoing Congressional consideration for more printing of helicopter money.
The coronavirus pandemic threw precious metals markets into disarray, which set off a scramble by traders to cut their losses. The displacement was triggered by a dysfunction in the market in March and early April, which was caused by fears of a breakdown in ordinarily frictionless gold supply chains. More than 20 million troy ounces of gold found their way into the U.S. in just the past three months as America braces for the coming economic storm, featuring not rain sleet and snow, but recession, inflation, and a quickly devaluing U.S. dollar.
Bank of America anticipates gold prices to nearly double by this time next year and that’s the last thing their Bank of America’s Merrill Lynch brokers would wish for, but reality has a way of imposing its will. Don’t get caught without a chair when the music stops! Call the experts at American Bullion at (800) 653-GOLD (4653), before prices skyrocket! Make a plan to protect and secure your portfolio, assets, and legacy.
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.