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Dear Fellow Investor,
It’s a tale of two markets.
First, there’s the U.S. stock market — buoyed by a red-hot GDP number and expectations of an accommodative Fed, the last burst of energy needed to reach all-time highs was provided when President Trump trumpeted an imminent trade deal with China.
So much for that.
After Trump tweeted out Sunday night that talks had collapsed, the Dow dove head-first at the opening on Monday. The “plunge protection team”...or simple greed...sparked a rebound yesterday, however, and the losses were minimized.
Today saw another big drop, however, and there was no stopping this one: The Dow closed down 636 points, or 2.4%. All the other big indices did equally badly.
Which brings us to the other market I want to talk about: Gold.
Here’s where we get the good news. Gold gained $3.30 today, despite a rising dollar.
Just as important, the gold stocks actually rose strongly, fighting the tremendous downdraft in the broader equity markets. The Gold Bugs Index (HUI), for example, gained 1.80%.
On a day when investors were selling anything they could, this was an impressive performance by gold and mining stocks.
The Winner No Matter What Happens
Today reinforces a point that I’ve been pounding home in my speeches and articles over the last year or so: No matter which direction the future takes, gold will benefit.
Consider the most basic and likely economic scenarios we could see — economic growth or decline.
Scenario No. 1: Economic Growth. If we get past this rough patch and the economy continues to post 3%+ growth rates, all of that money sloshing around from QE1, QE2, QE3...plus about $4 trillion in the Fed’s balance sheet and $1.5 trillion in excess banking reserves...will get put to work in the U.S. economy.
Given the tight labor markets, that means significant price inflation. Combined with a Fed that simply can’t raise interest rates (due to the monumental size of the federal debt), inflation could quickly get out of control.
Ergo, gold will soar.
Scenario No. 2: Economic Recession. This one’s easy. If the Fed even sniffs a recession coming on, it will quickly move to lower rates.
Of course, with rates already near 5,000-year lows, that won’t work...and they’ll have to quickly move back to quantitative easing. And it will take much, much more QE than ever before to get the same effect on the economy.
The result here? Gold will soar, to even higher levels.
Ironically, this would also boost the U.S. stock market. But that’s OK – there’s room for Wall Street to win...as long as the whole monetary regime doesn’t collapse. (And in that case, your gold will serve you well.)
The bottom line is that we’re in extreme times. And in virtually every path forward out of this mess (or in it deeper), you’ll want to own gold.
Note: If you want to get the low-down on the most powerful gold-investing strategies, as well as the top picks of the world’s best experts, you need to attend this year’s New Orleans Investment Conference, being held from November 1-4.
Click Here to register now, before rates begin to rise, and enter promotional code FREEGOLDCLUB for a free gold club upgrade.
All the best,
Brien Lundin
Editor, Gold Newsletter
CEO, the New Orleans Investment Conference
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