Hopefully, you are among those who followed our advice a few months ago to “...exit (the stock market) a few months early, instead of a few days too late.” Even if we see violent movements upwards on certain days, there is much underlying weakness that makes a sustained market rise a difficult proposition. We have written before about how precious metals and certain types of annuities can help protect retirees against economic shocks like we are seeing today. Even though the stock market was down 35% in the last 6 weeks, the price for physical metal has remained remarkably strong. Due to current policy responses to the Corona Virus Pandemic and stock market mayhem, those owning Gold and Silver will also continue to see a rise in the purchasing power of their metals, versus paper currency. As the chart below suggests, we should see continued Gold strength as compared to equities moving forward, if history is any guide.
Back in October, we wrote about a likely recession to come in 2020, and the subsequent boost to Gold and Silver prices. Of course, this projection was made without knowing about the current Coronavirus Pandemic we are all in. This pandemic served as an important hastening agent to what was likely to occur economically anyway. But the current circumstances for Gold and Silver have already met (Gold) or exceeded (Silver) our expectations for the year, and are poised to bound much higher. The ability of the bullion banks to manipulate the prices of precious metals lower is currently broken, and current conditions favor the metals.
With news of Swiss refiners shutting down due to quarantine, and government mints running low/running out of coins to sell, there is a large disconnect between the (paper) spot price for precious metals, and the cost to secure an actual coin. Recently, the spot prices for Gold and Silver were $1450 and $12.35 per ounce. Meanwhile, the cost to secure Gold or Silver Eagle coins was about $1695 and $23.50 per ounce, respectively. While there are other forms of Gold and Silver available for lower premiums, the point is that the demand for physical metal is far greater than the spot price accurately reflects.
Before the current crisis, the US government was already implementing policies that were supportive of precious metals. But actions taken this week seem to already be serving as rocket boosters for the metals. And since massive daily money printing efforts are just getting started, this bodes well for those of us who enjoy the protection that precious metals ownership brings. For those who have hesitated, and now feel it may be too late - come on in! This party has just gotten started.
The Times, They Are a Changin'
Maybe we shouldn’t seem too excited about things, with many experiencing difficulties in the world we live in. But surely it isn’t wrong to be excited about a solution to some of the challenges people are experiencing today. Nor is it wrong for those of you that have been loyal readers and metals purchasers down through the years, to now enjoy the protections that precious metals ownership has secured. If anything, perhaps what is going on with precious metals will help to shake up more government officials to the wisdom of backing our currency with metal, as it once was. We wrote in 2018 about government initiatives for sound money, but back then the legislation received scant support. Perhaps the renewed interest in precious metals will help build that support to the levels necessary to see changes made.
But regardless as to what the future holds for the Coronavirus, the stock market, the Federal Reserve, the American Economy, or the upcoming 2020 election, one thing remains clear. Gold and Silver seem to shine best, when clouds of uncertainty are at their worst. Historically, when clouds have been dark and hope almost lost, Gold has been there as a beacon of certainty not only for governments and nations, but for individuals as well. Silver is even part of the solution in fighting the global pandemic, in it’s colloidal form. It seems that no virus or bacteria can long abide Silver. It is being used in liquid form (suspended silver particles) to sanitize hospital rooms and equipment worldwide, and used in various medications. There are silver-infused bandages that help heal wounds, and silver-infused face masks that help keep medical personnel safe during long shifts. Many have found relief using certain types of colloidal silver in a nebulizer, for breathing treatments.
Not only are Gold and Silver useful in medical instruments and in the applications mentioned above to treat physical ailments, they are of course most well known for curing economic or monetary ailments. It was Gold that brought the world financial stability at the Bretton Woods conference in 1944. It was the “temporary” suspension of Gold backing for the Dollar, otherwise known as the “Nixon Shock” of 1971, that has allowed the uncertainties of today’s financial systems to proliferate. Meanwhile, Gold has provided bountiful protections for those who kept themselves on a “Personal Gold Standard”, by owning precious metals in their personal portfolio. We have illustrated before how the performance of precious metals has compared favorably to other alternatives even in good times. These comparisons even more dramatically favor Gold in times like today.
Earlier we wrote about why $14 silver would be cheaper than $13 silver, for the average precious metals enthusiast, and recommended loading up for $14, while premiums were low. Today (3/24/20) while finishing this article, I glanced at current prices to discover that Gold is up 6.51%, or over $100 today, and Silver is up 6.33%, or $14.21 spot price currently. Meanwhile, it will cost you over $25 for a new Silver Eagle, or $1852 for a new Gold Eagle, if you can find them. Thankfully, there are plenty of other bullion and investment-grade products available at the United States Gold Bureau that you can use to protect yourself with, in the current storm. I recommend you give them a call, if you haven’t already...