Gold Prices Roar Higher

24 Feb

Gold Prices Roar Higher

Market Looks Ahead, Doesn’t Like What’s Coming Our Way!

Gold prices screamed to seven-year highs on Friday.  Early Monday morning, investors woke up to see the Dow Jones hammered down over 700 points while gold continued its rise, reaching as high as $1,687, up over $40 per ounce from its previous close. This is as of print. This gold bull market seems poised to continue its vigorous run.

No wonder.  Have you been watching the news?

A deadly virus from China.  A plague of locusts in Africa, and bats in Australia.  Outbreaks of Swine Fever and bird flu.  All that and earthquakes, too.

These may not be biblical events, but they are reminders to protect your family’s wealth from the unexpected.  

The Drudge Report headline Friday was short and to the point about the coronavirus:  OUTBREAK SHIFTS, SPREADS.  “This new virus represents a tremendous public health threat,” said a CDC official on a call with reporters Friday.  

We have been raising the alarm about the coronavirus since January when we identified it as a classic black swan event:  “an unexpected event with an outsize impact.”  (See The Coronavirus, Black Plague, and Black Swans.)

But the COVID-19 virus, bats, and locusts aren’t the only developments to be concerned with.  They aren’t the only things driving gold higher.  Remember that the new gold bull market got underway last summer, well before the plagues.  

The factors driving gold include the skyrocketing US debt, global de-dollarization, Fed policy, and US interest rates.

And don’t forget the top-heavy stock market.  At the same time we wrote last week that the stock market has the “jitters,” Goldman Sachs was telling its clients that a near-term correction “is looking much more probable.”  Oppenheimer agrees, telling its clients “the impact of the coronavirus on earnings may well be underestimated in current stock prices.”

We think those are gross understatements.

On the interest rate front, the yield on the 30-year US Treasury sank to an all-time low on Friday.

Would you loan money to the US government for 30 years for an annual return of only 1.89 percent?  That’s a negative real return if the Fed succeeds in its target of debauching the dollar by two percent a year.  We think that as the global de-dollarization movement continues, the Treasury will be forced to pay far more than today’s rates to borrow enough to fund its debt.  Those higher rates mean huge capital losses in the bond markets.  

It’s shaping up to be a bloodbath, the financial equivalent of a global plague.

For those who have not already done so, we recommend our friends and clients move to safety now.  The stock and bond markets have had a powerful run, but they are no place to be as a crisis deepens.  

No other financial safe haven can even compare with gold.  It is universally desired in good times and bad.

Visit with your Republic Monetary Exchange gold and silver professional for specific suggestions based on your portfolio.

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