Editor’s Note: Today’s article comes from Rich Checkan, president of Asset Strategies International.
As a gold investing expert and trusted Pillar One Advisor for Wealthy Retirement‘s publisher, The Oxford Club, Asset Strategies International helps everyday folks use gold investing as “wealth insurance.”
Now, as we’re threatened with a prolonged bear market, Rich is helping investors catch up and prepare themselves for more downturns in stocks, and he’s offering a free Silver Eagle with each qualifying purchase to help you get started.
You can contact Rich by calling 800.831.0007 or by visiting Asset Strategies International’s website.
– Mable Buchanan, Assistant Managing Editor
The one-month carnage in U.S. equities is substantial. After hitting an all-time high a month ago, the S&P 500 has surrendered $10 trillion in value.
The first cases of COVID-19 were reported in December. As a result of panic at the hands of this microscopic threat, here’s how the markets have fared since the start of 2020…
- The Dow Jones Industrial Average is down by more than 22%.
- The S&P 500 is down by more than 19%.
- The Nasdaq is down by more than 14%.
The real concern among investors is that we are nowhere near the bottom. The speed at which these markets collapsed is nothing less than scary.
But the recession this tiny virus caused should not have been a surprise. The “everything bubble” created by easy money was eventually going to burst. And the bigger the bubble, the bigger the bang.
A pin invisible to the naked eye was the catalyst to pop the biggest bubble of all.
Gold to the Rescue?
It’s hard to grasp the concept, but gold actually did come to the rescue…
Yes. At first, gold dropped alongside stocks, but the difference is in why it was sold and how quickly it is recovering.
Gold was sold off initially – as it often is in a financial crisis – by investors seeking to tap its liquidity to meet margin calls or to raise cash for the uncertain weeks and months ahead.
But since gold’s price did not drop as a result of any fundamental weakness, bargain hunters swooped in – again, as they often do – to buy gold cheaper than it ought to be.
As a result, since the beginning of 2020, gold is up by more than 7%.
Where Does Gold Go From Here?
For me, there is no doubt… gold will go significantly higher.
That said, you should expect the volatility in all markets to continue until the number of unknowns is less than the number of knowns.
Along the way, the gold price will continue to be sentiment-driven. Like the stock market, gold will rise and fall on the latest news of the day.
But I fully expect to see the frequency and magnitude of the price movements on the good days to outweigh the frequency and magnitude of the price movements on the bad days.
We are in a bull market for gold, and higher prices are where we are headed.
To help us get there, we expect strong central bank buying to continue. We expect investor demand to continue and increase in volume.
We also expect the Federal Reserve to maintain its accommodative stance, eliminating the opportunity cost of holding gold. With negative real returns on cash and deposit accounts, holding gold is a better option for investors.
Limited Supply and Soaring Premiums
Now, it goes without saying that it is better to have already bought your gold as wealth insurance before the emergency presents itself. Easy concept to grasp.
You buy auto insurance before you wreck your car. You buy homeowners insurance before your house burns down.
After the fact, insurance is either unavailable or incredibly expensive.
It is the same when using gold as your wealth insurance. After four to five years of limited demand, the government and private mints settled into production levels to meet relatively weak demand. Everyone was buying stocks. Few cared about gold.
Then, in one month, $10 trillion of value was erased from the S&P 500. Greed gave way to fear in a massive way. Demand surged, but production could not keep up nor catch up.
Quickly, bullion coins and bars in sizes retail investors prefer and can afford were gone. Just as with toilet paper at the grocery store (we haven’t seen a roll on a shelf in nearly a month), supplies run out, delivery times grow longer and premiums rocket higher.
Immediate Delivery and Tiny Premiums
To my knowledge, there is only one place you can go right now to buy gold, silver and platinum physically, have it delivered immediately, and pay only 2.25% or less in premium.
Nearly 25 years ago, we first introduced the Perth Mint Certificate Program to Oxford Club Members.
This program, along with Perth Mint’s new online program (Perth Mint Depository Distributor Online), is tailor-made for putting more of your hard-earned money into precious metals and less into dealer premiums.
And they are the only two programs in the world with a government guarantee.
Most importantly, they are the only way to buy your wealth insurance in the midst of the financial crisis without being penalized.
Unless you enjoy throwing away $0.45 on every dollar you spend on wealth insurance, consider diversifying into gold now.