Gold to Dominate in 2019
Gold to Dominate in 2019 – BEST FINANCIAL SAFE HAVEN by Daniel Ameduri – Future Money Trends
***NEW Stock Suggestion Below***
After a decidedly euphoric decade in the equities markets, the fourth quarter of 2018 shook the foundations and made the risk-off trade attractive once again. Many asset managers will define the risk-off trade as Treasury allocations, but there’s ultimately nothing quite like gold in times of financial crises.
***The best part is that the gold equities are at rock bottom prices, in my opinion, and we can buy the best assets on Earth right now at the lowest valuations they’ve ever been at!***
There’s a convergence of events all happening at the same time, and all roads lead to the same conclusion: market euphoria doesn’t last forever. We’re at what is most likely the tail end of a decade-long credit cycle. It’s one of the longest ones on record, during which 10-year U.S. Treasury yields were pushed down to 1.385% but are now normalizing to more sustainable levels:
Rising interest rates have put downward pressure on the major stock market indices as large investors start to wake up to the fact that the easy money party’s over and the punch bowl is being taken away.
At the same time, there are market headwinds in the form of a trade war and government shutdown, both of which are taking longer than most people expected. The timing couldn’t be worse for these catalysts to happen – they’re unwelcome developments in the late stages of the credit cycle.
If you’ve been in the investing game long enough, you’ll remember a time in the late 1970s when investors fled from both stocks and bonds. Meanwhile, gold rose from $35 to $850. Most investors don’t remember this, so they’re under the mistaken impression that money will necessarily flow to Treasuries when the stock market crashes.
Will that movie get played again in 2019? Actually, the most probable scenario will be much worse, as the mounting national debt – approaching $22 trillion now – is much greater than it was in the 1970s when the federal debt was just a few hundred billion dollars. And the rate of the increase is growing as well:
And now, unlike in the 1970s (or ’80s, ’90s, or ’00s), we’ve gotten to the point where America as a nation owes more than it’s producing. By the Fed’s own admission, the debt-to-GDP ratio is currently over 100%:
It’s an inverse relationship leading to a vicious cycle: as the cost of servicing the national debt increases, there’s less available capital to be used productively. Veteran investors have seen this end-of-cycle behavior before, but never to this extent.
Raising Treasury yields, like U.S. Federal Reserve Chairman Paul Volcker did in the 1970s, isn’t possible without tanking the stock market anymore. Volcker was able to raise 10-year T-note interest rates north of 12% in the 1970s, while Jerome Powell couldn’t even raise the rate to 3% without inducing a 20% correction in the S&P 500.
And it’s the same Fed that has printed dollars into a pit of devaluation, draining our currency of its usefulness and giving nations like China, Russia, India, and Turkey every reason to dump the U.S. dollar and shore up their gold reserves – which is exactly what they’ve been doing.
With U.S. Treasuries and dollars getting dumped by world powers because America ran up a massive debt and lost the trust of other nations, precious metals aren’t just the go-to safe haven – they’re the only reliable safe haven in the face of an imminent financial reset.
The most likely scenario is that gold will behave much like it did after 2008: it will commence a new bull market, rising over the next several years at least. And when the U.S. dollar is replaced as the world’s reserve currency, gold will not only dominate – it will be the only remaining option.
New Stock Recommendation: Consider shares of Sandspring Resources (TSXV: SSP & US: SSPXF).
I’ll have all the details for you tomorrow morning pre-market.
This is one of the best gold deals I’ve ever seen, and we’re coming in at a crazy-cheap price.
The company has a market cap of $40 million, yet $150 million has been invested in it since 2009, real hard dollars that have helped develop the company into what it is today, holding what is one of the largest gold resources on the planet owned by a publicly-traded company.
I think others see what we see as well: in the last year, a top gold producer has come in and purchased 16.7% of the company, as well as a resource legend who’s taken an 9.3% stake in it.
All of this is happening right now, and the stock is essentially trading at the lowest it’s ever been, barely off the bottom but clearly in an uptrend and possibly ready to break higher on gold’s next move.
It’s a HUGE deal for us, and I’ll share with you why it belongs in our portfolios tomorrow.
Editor’s Note: I only buy the stock recommendations in this letter.