Monday, February 5, 2018

With recent stock market corrections, gold has now moved ahead of the Dow as a better investment for the year

Even with last Friday's beatdown of the gold price by the cartel, the precious metal has moved ahead of the Dow as a better investment so far in 2018.

With two straight trading days of what appears to be at least 600 point declines for Dow equities, this market is now underwater for the year while gold remains in the black with a .2% gain since January 1.

With Treasuries no longer serving as a bolthole, panicking investors are going to have to scurry into something else—like gold and silver, which should rise to prominence as this crisis deepens. Alright you say, so why did they drop hard on Friday? That was the old “throwing out the baby with the bathwater” phenomenon, where panicking investors, sometimes facing margin calls, sell anything they can lay their hands on. History shows, however, that the broad stock market and the PM sector are contracyclical, meaning that they move in opposite directions. Adam Hamilton has recently written a very good essay about this entitled Stock Selloffs Great for Gold making it plain that this is indeed the case. This does not mean though that they won’t drop in unison during brief periods when blind panic sets in. The way for PM sector investors to handle the panic periods, which are usually short and early on in the broad stock bear market, is to either hedge positions with Puts or step aside and buy back later. As the bear market morphs into a grueling and seemingly endless downtrend, PM stocks are expected to advance in a secular bull market that will result spectacular gains in many from current levels. – Clive Maund via Silver Doctors

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