Gold: An Investment Theme in the Midst of the Global Pandemic


The correcting stock market and global coronavirus pandemic have triggered sudden and irreversible demand for precious metals

Each decade has a distinct investment theme. As the decade unfolds, one asset class rises to the Top and outperforms everything else.

Below are some examples, as follows:

  • During the 1990’s, the stock market was the place to be. An explosion in Internet stocks headed the bubble. The NAS rallied from 330 in 1990 to 5100 by Y 2000.
  • During the 2000’s, precious metals and commodities were the best performing assets. Gold rallied from a low of 255 in 2001 to 1923 by Y 2011.
  • During the 2010’s, money flows switched to the stock market. Low and negative interest rates fueled record buybacks and rising earnings multiples. The DJIA bottomed at 6,469 on 9 March 2009, and prices likely peaked in March 2020 at 29,600.

The transition period from 1 asset class to another takes several months, sometimes longer, the Key is recognizing it.

After this 11-yr Bull market in stocks, the next asset shift has begun. The Y 2019 breakout in gold combined with Fed’s easy monetary policy and negative bound interest rates suggests the Ys 2020 thru 2030 will be a frame that heavily favors precious metals. Gold 1st, then silver and platinum will follow, palladium appears to have peaked.

The correcting stock market and global coronavirus pandemic have triggered sudden and irreversible demand for precious metals.

In the US, coin dealers sold out of all American Eagle coins (gold, silver, platinum) last weekend. Premiums have spiked. There appears that an unprecedented shift to precious metals is happening.

If gold comes back to test the 1350 – 1400 breakout area, that could be the last great buying opportunity of this decade. By the end of this decade, we expect gold to reach 7,500 – 10,000 oz.

The Big Q: Does a 7,500 – 10,000 price target for gold sounds outlandish?

The Big A: Think about the triggers that could drive the precious Yellow metal to those prices, as follows:

  • Loss in Confidence: A total collapse in confidence in Governments and their ability to manage.
  • Widespread Money Printing: Governments may resort to debt monetization and currency depreciation to inflate away record debt levels, happening now.
  • Speculation- A surging uptrend and new all-time highs in precious metals leads to the FOMO aka the fear of missing out, and sparks a speculative bubble.

Have a healthy weekend, stay at home