We Bring You This Critical Alert, Contributed By WealthResearchGroup.com and Their Founder, Lior Gantz, Who I regard as an expert on investing in these critical times.
Gold rallies, thanks to numerous catalysts in general, but the BIGGEST of all just triggered. We’ll receive confirmation in the coming days.
For one, gold is not affiliated with any nationality, so institutions in every country as well as individuals (to a degree) buy it in times of great uncertainty. Gold is also bought as an inflation hedge, though it’s not the most effective one. Its expertise is with cases of hyperinflation (5% and higher). Gold is bought mostly as jewelry, so the price of oil and mining labor play a part, but its most driving factor is NEGATIVE REAL RATES.
Nothing, absolutely nothing, moves gold prices higher like seeing cash burning a hole in your pocket. Warren Buffett, the greatest investor in the field of identifying businesses that possess unique competitive advantages, mocks gold and compares its return with that of stocks, but that’s a big mistake on his end.
I never buy gold with the expectation that in doing so I’ll make bigger returns than in my real estate portfolio or in my stock market portfolio; I buy it when my cash savings are GUARANTEED to lose money, and I sell it when interest rates are positive.
Better said, I load up on gold in times of negative real rates and unload when those conditions change, for a profit. On top of this, I maintain a core position in physical gold and silver eagles equivalent to my family unit’s spending needs for 24 months, in the unlikely case that during my lifetime there is a grave economic disturbance, or a reset of the system that puts me in a situation that actually requires bartering precious metals or worse.
In the past 3 days, we’ve seen confirmation of negative interest rates!
Gold spiked to $1,409 immediately and silver followed suit. The reason is that the “risk-free” yield which our financial system is based on – the 10-yr Treasury note – currently returns just about 2.00%, and that dropped to as low as 1.91% a couple of days ago.
Inflationary expectations are 2% this year, which puts us right at the border between positive and negative.
Since the FED isn’t lowering its inflation forecast down from 2%, but is about to cut rates, investors are pricing in that a period of negative real rates (10-yr yield – inflation) is commencing.
This is the reason the S&P 500 is breaching past the historic 3,000 points mark. It will probably go up as much as another 20% by the time the slowdown really starts to take effect and investors detonate this bubble and move to other asset classes.
In the early stages of a bull market, the big names rally first. Then silver joins in, at which point the small-cap miners go nuts. I expect that to begin happening once silver hits $17.00/ounce.
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