March 2020 - Week 3 Edition
Gold is Near “Neutral” for 2020 While Stocks and Industrial Metals are Down Over 20%
Last week, we wrote about stocks falling fast while gold rose fast, but we need to revise that story this week. Since then, gold has fallen over $150 as some investors have been forced to cash in their gold ETFs to cover margin calls on their stock investments. This also happened during other market crashes in 1987, 1998, 2000-02 and 2008, so we were not surprised, but we must add that history also shows that gold typically recovers rapidly from such selloffs. Still, as of March 16, gold is basically flat for the year-to-date while stocks and silver are down over 20%, making gold the “winner by default” so far during 2020.
Due to the global economic slowdown, industrial metals are also down double-digits for the year to date (that is why silver is down so far). The CRB commodity index is down 28.4%, year-to-date, which makes gold’s “neutral” performance good by comparison.
It’s not too late to get on board with gold, since stocks will remain volatile as long as (1) the coronavirus keeps expanding around the world, slowing economic growth and spreading panic; (2) Democrats gain in the polls during this controversial election year; (3) Saudi Arabia wages a deflationary price war on the global price of oil; (4) global central banks push interest rates further below zero in this deflationary environment; and (5) the world’s nearly-forgotten “hot spots” take advantage of global unrest to expand their power, testing America’s will during a time of crisis. Historically, gold has been a proven crisis hedge in times like these. Even though gold will probably outshine silver, don’t forget to add some silver.
Gold Recovered Strongly
Gold corrected sharply on Friday and again on Monday, March 16, falling over $150 overall, to a four-month low of $1,446, the lowest level since November 27 after reaching its highest level since April 2013 just a few days earlier. This was partially due to profit-taking by stock investors covering their losses from a rapid (3-week) loss in the major stock market indexes. This also happened after the stock market routs in 1987, 1998, 2000, 2002 and 2008, but gold recovered strongly after those forced sales, and it should also recover rapidly this time around, especially since the Fed cut short-term interest rates to zero Sunday. On Tuesday, March 17, gold is already up to $1,535.
Silver American Eagles are “Sold Out” But We Have a Full Inventory
Don’t forget silver at this historic 116:1 ratio to Gold. The gold/silver ratio is at a historic high of 116-to-1 now, but that only means that we are in a time of crisis, favoring gold, when industrial demand is declining, but industrial demand will return and silver should return to at least an 80-to-1 ratio in the near future, perhaps within a year. Use this time of historically low silver prices to stock up on silver coins.
Many dealers are totally out of American Silver Eagle bullion coins, and the U.S. Mint is temporarily incapable of resupplying them. The Mint announced last Thursday, March 12th a hiatus on silver sales after Eagle sales jumped by 1.57 million pieces in a week, boosting their 12-day March total to 2,320,000 pieces — the highest for any month of March since 2016, and four times as much as the total 650,000 ounces sold in the full month of February and nearly three times as much as all of last March (at 850,000).
Silver Eagle sales have been brisk in our company, too. Friday was best day of the month, with a surge in people buying online and in person. We still have Silver Eagles in stock. (I’m sorry to report we have no extra paper towels or toilet paper, but we have plenty of supplies for our staff.) Call now and buy some American Silver Eagles and other classic silver and gold coins while supplies last!
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