November 2019 - Week 4 Edition
Most Millionaire Investors Expect a Significant Stock Market Correction in 2020
Even though many investors are pouring money into stocks as stocks reached new all-time highs on Monday, November 25, most millionaire investors are suspicious of the stock market going into 2020.
A recent survey of 3,400 investors with at least $1 million in investable assets by UBS, a Swiss investment bank, found that more than half of them think that there will be a “significant market sell-off” by the end of 2020. They have already acted on that belief by moving an average 25% of their portfolio to cash, even though cash accounts pay very little in the U.S. and virtually nothing in Europe. Two-thirds (66%) of those surveyed believe the market will be driven by the negative headlines of world hot spots in the Middle East, or China, or Latin America, or the American political crisis in the coming election year.
Billionaire hedge fund CEOs, like Ray Dalio of Bridgewater Associates, are also questioning if the market can continue its record 11-year-run to the stratosphere, so he has advocated a position in gold.
The World Gold Council recently surveyed 18,000 market participants from around the world on their beliefs about gold. They found that more than half of those surveyed in the U.S., India, Germany, and China trust gold more than currencies, and 67% of participants agreed that “gold is a good safeguard against inflation and currency fluctuations.” Researchers also asked what motivated an investor’s decision to buy gold. The leading motivation (44%) was to manage risk via diversification by shifting money away from more volatile investments to gold, which they believed to be more stable. The second most-cited reason (31%) was due to “the recommendation of a financial advisor or a friend,” while the third largest reason was that people bought gold because they believe the price was low or beginning an upward trend.
Also, 64% of those who have previously invested in gold would purchase it again in the future, so gold investors tend to be long-term oriented and willing to accumulate more on a consistent buying program.
As with any past episode of political uncertainty and wild stock market gyrations, it pays to take some stock market profits and invest in gold and silver bullion and rare coins. It never pays to wait too long, since stocks can fall very fast – and coins can rise very fast – in times of national uncertainty, such as we are entering now.
Gold Is Finding A Base
Gold is finding a base around $1,450 while the China/U.S. trade talks are on-again and off-again as the two nations edge closer to a trade deal. On Friday, President Trump said the two sides were “very close to a deal,” and on Sunday, the Chinese government called for stronger protection of intellectual property rights, a previous sticking point in negotiations. However, both sides have been known to scuttle key concessions at the last minute. Investors are also pouring money into stocks as they set new highs.
Project 20/20 is Gaining Steam
In May, I told you a little bit about Project 20/20, which will be our program for enlightened coin accumulation – using a “rifle shot” approach rather than a “shotgun” blast to find undervalued “sleeper” coins. As I said, we will begin by bringing you highlights of recommendations in the major types of coins we like most – for their sheer beauty, profit potential and historical importance. We’ll highlight the most undervalued coins, starting with $2.50, $3, $5 and $10 Indians and Type II and III Liberty Double Eagles.
By using the capitalization approach (coin population reports times market value), we now have one more tool toward determining better coin purchase opportunities – where the profit leverage is to your advantage.
Already, we have seen over 25% of our antique coin 20/20 recommendations rise in price and most of our 20/20 $10 and $25 American Gold Eagle coins also rose in price. This is just the beginning. Please contact your account representative to learn more about how you can benefit from this innovative 20/20 program.
There are some other factors that increase a coin’s popularity, like low mintage, first and last year of a series, etc. I still believe strongly in set building, which is a good way to diversify coin holdings. In past bull markets, this has often resulted in “set premiums,” resulting from the sale of special complete sets.
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