Matches Exceptional Investors with
Exceptional Investments

Menu

Blog

THE STORM OF CURRENT MARKET VOLATILITY

By: Christine von Liederbach
February 15, 2019
Share With

I ‘ve been thinking about a terrifying flight I took late one night deep in winter storms across the Pacific.  As shocking thunderbolts of vicious lightening cracked throughout the night sky, while untamed, deafening bursts of thunder ominously exploded in profound and violent unison, I tried, completely without success, to steady my pounding heart and racing mind.

The hair raising turbulence that just would not end, along with the building intensity and velocity of the assaulting winds, for what seemed like hours, along with frequent unexpected rapid, almost vertical, stomach turning, breathtaking drops in altitude, coupled with absolutely no word from the cockpit regarding our circumstances, added to the extreme anxiety building throughout the packed passenger cabin, as a strange silence slowly grew to consume the panicked atmosphere.

Finally, the violent shaking of the aircraft became so extreme, that the Captain had to turn on the emergency lights and signs, as he finally spoke for the first time, making the announcement, “Ladies and Gentlemen, I am declaring a state of emergency, please remain seated with your seat belts securely fastened.”

That’s it?… that’s all you have to say?!!!…I thought, as he turned off his speaker, returning to his pressured cave – uttering not one more word, as I continued to close my eyes and pray – now out loud.

The visceral gripping and bone crushing fear that consumed me and all of the other passengers was palpable and electrifying, and I felt like I was hurdling through dark, deep space in a flimsy tin can, strapped to a steel seat, as it accelerated uncontrollably into the miserable downpour of a blackening doom, and possibly an abysmal and silent watery grave.

Now I see uncertainty and concern growing around me due to market volatility.

 

Jeffrey Gundlach of DoubleLine Capital recently told Reuters, “The selloff will continue and we aren’t yet seeing anything resembling a panic low.  Now is the time for capital preservation.”

Some credited Gundlach’s comments with triggering the recent near 650-point drop at one point for the Dow.

Again just last week we experienced the Dow rapidly falling close to 588 points, and this churning volatility has many investors sitting on the edge of their seats.

Morgan Stanley’s chief investment officer Mike Wilson told CNBC recently that it is too soon to buy into this latest dip.  “It all stems back to liquidity and the Fed and the tightening of financial conditions-that is our thesis all year- it’s been this rolling bear market and we finally got to the big tech stocks.”

Wilson continued, “The selloff is coming now because some investors are realizing that companies will be delivering some bad earnings news next year.”

Wilson says the asset corrections are a “normal course of business that is very natural at the end of a bull market that needs to consolidated.”

Hum, the end of a bull market, just like the shaking aircraft, who knows when the turbulence will stop, and how or when it will end?  Disconcerting to say the least.

Then I think of gold, beautiful gold. When I think of gold, I smile and feel a calm.

 

GOLD AS A SAFE HAVEN ASSET AND WEALTH ATTRACTOR

 

Gold has never gone to zero and for centuries has been treasured as a physical safe haven asset and a symbol of wealth and power throughout civilization the world over.  Gold is rare.  Gold is precious.

Famed investor, Robert Kiyosaki, author of the International best selling book

Rich Dad, Poor Dad, says gold is a wealth attractor.  He says that he met a spiritual guru wearing gold who told him that gold is the ‘Tears of God’.

Kiyosaki also says if he wants to earn $10,000 a month, he keeps $10,000 of gold near him, and if he wants to earn a million dollars, he keeps a million dollars of gold.

The Harvard – Smithsonian Center for Astrophysics says, “Earth’s gold is rare because if is also rare in the universe and that observations provide evidence that earth’s gold resulted from the collision of two neutron stars.”

In fact, Carl Sagan says, “We are all star stuff, and our jewelry is colliding-star stuff.”

Over the past 15 years gold has outperformed the equity market, gold has returned 355% over the last 15 years while the Dow has returned only 58%.

 

GLOBAL ECONOMIC CONCERNS AND GOLD

MarketSlant says: “Global economic concerns and the fact that global central banks are accumulating physical gold are putting pricing pressures on gold and many of the other precious metals.

Morgan Stanley’s chief investment officer Mike Wilson told CNBC recently that it is too soon to buy into this latest dip. “It all stems back to liquidity and the Fed and the tightening of financial conditions-that is our thesis all year- it’s been this rolling bear market and we finally got to the big tech stocks.”

Wilson continued, “The selloff is coming now because some investors are realizing that companies will be delivering some bad earnings news next year.”

Wilson says the asset corrections are a “normal course of business that is very natural at the end of a bull market that needs to consolidated.”

Hum, the end of a bull market, just like the shaking aircraft, who knows when the turbulence will stop, and how or when it will end? Disconcerting to say the least.

 

IS GOLD FOR YOU?

Jim Rickards, author of Currency Wars, believes that despite the headwinds gold has faced due to the Fed raising rates, the economy is fundamentally weak, and he believes the the physical fundamentals are stronger than ever for gold saying, “Russia and China continue to be huge buyers.  China bans export of its 450 tons per year of physical production.”

Rickards also says “deteriorating relations between the U.S. and Russia will only accelerate Russia’s efforts to diversify its reserves away from dollar assets

to gold assets.  (Dollar assets can be frozen by the U.S. on a moment’s notice, where gold assets are immune to asset freezes and seizures.)”

Importantly, Rickards also said “ China may be leading the world back to some form of gold standard by allowing oil exporters to convert the Yuan they receive from China into gold at the Shanghai Gold Exchange.”

A true capital shift is taking place throughout the globe at the moment and many foreign nations and central banks are dodging risk by accumulating physical gold

 

FIVE CURRENT REASONS FOR A GOLD BREAK OUT

This is the elephant in the middle of the living room that nobody is really talking about.  The Chinese people as well as the other Asian nations have loved gold for centuries.  Under Mao, Chinese citizens were not allowed to own gold.  Now, that billions of Chinese citizens can legally own gold once again, what will happen to the price of gold?

Further, Richards said that, “private bullion continues to migrate from bank vaults at UBS and Credit Suisse into nonbanks vaults at Brinks and Loomis, thus reducing the floating supply available for bank unallocated gold sales, which in turn makes physical supply of gold tight.  The main source of comfort is knowing that fundamentals always win in the long run even if there are temporary reversals. Patience is needed to stay the course and to buy strategically when the drawdowns emerge.”

Rickards explains that “ A10-year chart for the dollar price of gold shows that gold prices have been converging into a narrow tunnel between two price trends – one trending higher and one lower- for the past six years.  This pattern has been especially pronounced since 2015.  Gold has traded up and down in a range between $1050 and $1380 per ounce, technically indicating gold will likely break out to the upside or downside, typically with a huge move that disrupts the pattern.

And the evidence overwhelmingly supports the thesis that gold will break out to the upside for many reasons including:

 

Central banks are determined to get more inflation and will flip to easing policies if that what it takes

 

Geopolitical risks are piling up from North Korea to Syria to South China Sea and beyond

 

A substantial market correction may be in the cards

 

Acute shortages of physical gold have set the stage for a delivery failure or a short squeeze

 

Any one of these developments is enough to send gold soaring in response to a panic as part of a flight to quality.

 

And as far as the price of gold, Rickards believes “the current levels for gold look like the last stop before $1350 per ounce gold, and after that he says “A price surge is likely as buyers jump on the bandwagon and then it’s up, up and away.”

Rickards also said “Get ready for an explosion to the upside in the dollar price of gold.  Make sure you have your physical gold before the breakout begins.”

 

If you are considering gold as a long-term safe haven asset to add stability & safety to your portfolio and to give you peace of mind, call us today, and one of our knowledgeable associates will be happy to assist you. 855-554-4853.

 

 

 

Sources: Source:  MarketSlant   10/17/17; MarketSlant by Chris Vermeulen of The TechTrader says  Nov 1 2018; https://www.kitco.com/news/video/show/Kitco-News/2176/2018-11-14/RERUN-Gold-Is-Set-Up-Like-2015-Spectacular-Bull-Run-To-Come—CEO#_48_INSTANCE_puYLh9Vd66QY_=https%3A%2F%2Fwww.kitco.com%2Fnewhttps://phys.org/news/2013-07-earth-gold-colliding-dead-stars.htmls%2Fvideo%2Flatest%3Fshow%3DKitco-News


Share With
Although the information in this commentary has been obtained from sources believed to be reliable, The Gold IRA Company does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice. The Gold IRA Company will not be liable for any errors or omissions in this information nor for the availability of this information. All content provided on this blog is for informational purposes only and should not be used to make buy or sell decisions for any type of precious metals.
REQUEST FREE GOLD GUIDE

Complete The Form

Your privacy is important to us. We'll never share your information.