During the crash of 2008, mainstream financial analysts and pundits completely ignored gold. I wasn’t surprised; they came of age as financial professionals in a time when gold was regarded as a “barbarous relic” kept at Ft. Knox purely for reasons of “tradition.” Even Warren Buffet, the sage of Omaha, said gold served no useful purpose.
But by the time the dust began to settle at the end of 2008, gold was up 2.7% for the year, while just about everything else was down. It wasn’t a huge increase, but compared to the smoking craters left by other financial sets, gold’s performance was stellar. And then precious metals went on a tear that took silver to almost $50 and gold to almost $2,000 in 2011. Both made great fortunes for speculators along the way.
Suddenly, “gold bugs” were envied, rather than ridiculed.
The critical importance of this is that it’s a recent and vivid memory. I’ve long predicted that the next time there’s a big scare, many of these same financial professionals who failed to take gold seriously as a safe haven would remember and act differently.
Enter the correction of Q4 2018…
It’s certainly not true that mainstream investors flocked to gold in droves. It’s clear that relatively few did. But it was quite striking to me how often the subject came up.
I remember one talking head despairing about stocks falling again when the economy was doing so well—and that the only thing that was up was gold. It was a back-handed compliment, but it showed that gold is no longer ignored.
More important is that I saw several money managers, analysts and investors on such shows saying they were adding gold to their portfolios in late 2018, just to be safe.
And the data backs this up. We’ve seen gold break out of its usual inverse relationship with the US dollar over the last quarter. There were several times since last October when Wall Street was melting down and large numbers of investors went to cash—and gold—for safety.
In my view, this is clear evidence that precious metals aren’t just for gold bugs anymore. A large chunk of the financial mainstream now understands—and has directly observed—the vital role gold can play in wealth protection, and even wealth creation.
My theory that things would be different next time is no longer just a theory: it’s an observed fact that many more investors today “get” gold.
This is obviously extremely bullish for precious metals going forward.
That makes the big question today whether the correction of Q4 2018 was just that, or if there’s more bad news for the broader markets ahead. We may indeed be at the beginning of a long bear market.
Given how long the record bull on Wall Street ran, I’m inclined to expect more bad news than good news for mainstream equities.
If I’m right about gold regaining its shine as a safe haven asset, 2019 could be a great year for precious metals and a spectacular year for gold and silver stocks.
Oddly enough, there’s a case to be made that even if the party on Wall Street kicks back into high gear for a time—if, for example, the trade war ends, sparking renewed optimism—that would still be bullish for gold and silver.
I’ve written a free report on my outlook for precious metals in 2019, detailing all of the above and more factors.
I strongly encourage all metals investors to download my free report and give it some serious thought. It could make a big difference in how this year turns out for you.
I am certainly investing accordingly. I believe in putting my money where my mouth is. I will post a full track record of all my completed trades for the public to see and evaluate my results.
Meanwhile, this time already is different. That could make 2019 the break-out year for gold and silver that many of us have long been waiting for.
Tuesday, January 22, 2:44pm, EDT, 2019