I have come back from a long day of meetings having been updated on what is happening in the economy. I want to encourage members to increase their position in gold and silver to 10% from my previous guidance of 5%.
For those who followed this guidance – gold futures are at a multiyear high today and I am glad you followed this guidance. For those who followed my guidance (from my writing of 2 weeks ago) by buying an oil ETF – you have outperformed the markets by a wide margin. At this stage it would be good to take the profits on this trade, which are significant, and move on – as the risk/reward is no longer worth holding the position.
Given the fact that it is hard to purchase physical gold and silver at this time, as all the mints are closed around the world and dealers have little physical coinage on hand, investors are left to buy “paper” in the markets.
As members are aware, I have always advocated possession of physical gold and silver but that is not possible at this time. Physical gold and silver are now trading at a large premium to the actual spot price – which is very bullish for gold and silver. For example, an American 50 cent piece spot price is approximately $5.5; however, right now – dealers are selling it for $7 plus.
I believe the Fed, with its mammoth stimulus package, will “print all the dollars necessary” to save the stock market.
(I am sure Trump and Powell are best buddies now!)
The Fed Head, Powell, actually said in an interview today that “inflation is not a concern” and the Fed will buy all assets backed securities that require support. As a result, the Fed has indirectly opened the flood gates to much higher gold and silver prices.
I believe with the unlimited printing of paper money that the stock market will now be “saved” but it will come at a price of less confidence in “fiat” currencies.
Every Federal Reserve Bank is following a similar path and it is inevitable that gold and silver move up. Those who were buying prior to the Fed Head interview today and ‘gambling’ – frankly you gambled right – but you were speculating and it was not based on any economic data and it was at best a 50/50 crap shoot.
All I can say is if you were buying (the last 3 days) you were lucky that Fed Head “saved your ass” because there was no economic data to support going into the market, and taking a ‘long’ position, until FED HEAD, Powell’s update.
Today the Fed announced another 2.3 trillion dollars stimulus/lending program to support US states and cities ravaged by the coronavirus. I just cannot see how this gargantuan force feeding of money into the market cannot cause inflation and in turn – higher precious metal prices.
Disclosure: I have no personal benefit by giving guidance to members. I could be wrong! I am writing this because I know to date a minority of members do not even have any position in gold and silver and I am following up to encourage members to use the catalyst of today’s FED announcement to take at least a position in gold and silver. Talk to your financial advisor or you can buy an Exchange Traded Fund like SLV or GDX. Individual stocks have more inherit risk but Barrick is the worlds largest gold producer and trades at only 8x earnings. For silver stocks, Pan American Silver, is one of the largest silver producers in the world and has lots of cash in the bank, proven reserves and a world class management team.
Again, I have no personal benefit for any guidance given other than – this is the way I see it ….
In the past I have always told members that precious metals are simply a hedge in your portfolio in the event every other class falls due to a catastrophe – such as a collapse in the derivatives market.
However, it is very possible, with the Fed prepared to buy almost every type of security, and there is even talk of the Fed buying stocks, we could be in a very rare situation that all assets classes move up. But gold and silver will out perform because gold and silver are priced in US dollars.
Don’t overdo it with silver and gold and again 10% is certainly overweighting which makes sense, at this time for your portfolio. I know the vast majority of members, over the last 2 years, have bought gold and silver (through the many interactions I have had with them) but if you don’t have any gold and silver – this is definitely time to take a position to protect your portfolio.
Finally, members, the information I am sharing – is about trying to help “my tribe”.
I ask that you share this narrative on your social media in hopes of helping others.
Below is the link.