Dear Money & Crisis Reader,
As you probably have already heard by now, I’m on annual vacation this week.
But that doesn’t mean you’re going to stop getting top-quality Money & Crisis content delivered straight to your inbox.
I’ve asked some of my colleagues, as well as some industry experts, to fill in for me while I’m gone. These folks know more about crisis, money and personal liberty than anyone I’ve ever met.
Today’s issue comes to you courtesy of Olivier Garret, the CEO of the Hard Assets Alliance and expert gold investor.
All the best,
Editor, Money & Crisis
Don’t Even Think About Selling Your Gold
By Olivier Garret
A few days ago, I received a call from one of our customers. He was concerned about declining precious metals prices and wanted to know what he should do.
Frank — as we’ll call him to protect his identity — is a smart, high-net-worth investor. He’s not someone you’d expect to worry about temporary trends.
But then again, none of us likes to see red ink on our monthly statements.
And at times like these, it’s good practice to review why we invest in precious metals like gold and silver in the first place.
In this case, we should ask ourselves:
Do the reasons for investing in gold or silver hold up today… or is now the right time to sell?
My short response to Frank was that the recent decline in the precious metals market, while off-putting, is just common investor behavior.
Most investors will buy assets when prices rise to the highs. But the moment an investment takes a downturn, investors will get out.
When the stock market collapsed in 2008, few of us were willing to back up the truck and buy equities.
We all wish we bought then, but fear held us back.
In fact, many investors at that time sold off their portfolio… at exactly the wrong time.
Today we are in the exact opposite situation.
We are now only two months away from entering the longest bull market in modern history. Yet most investors are piling into speculative stocks, expecting this bull market will continue forever.
Just like in the late 1990s, people bought into the idea of a “New Economy” where traditional market valuation metrics no longer matter. Investors are buying into companies with no real prospects of actual earnings.
Look at Tesla, Amazon or Netflix. Their present valuations defy reason.
Almost every other week, I hear about new IPOs of some fundamentally marginal companies. Some of them don’t earn any income or sales. And yet, investors pour billions of dollars into them.
Do you remember when AOL bought Time Warner? What about the perfectly timed Palm Inc. IPO? Both companies were the holy grails of that time.
And where are they today?
Meanwhile, nobody is interested in precious metals or mining stocks because they have been in a bear market since 2011. But we don’t invest in precious metals to profit from short-term price swings.
We invest in precious metals because they are a time-tested hedge against a recession or any other crisis.
It’s like insurance for your wealth.
And bubbly stock prices are not the only thing you should be hedging today.
Today, almost all economies across the world are deep in debt.
This is the direct result of reckless monetary policies and a decade of artificially low interest rates.
Our personal debt is back to pre-crisis levels… government and corporate debt have more than doubled… and companies now are more leveraged than they were in 2008, which is a recipe for disaster.
Not only that, we are facing serious demographic headwinds as the world’s population grows older. This will eventually culminate in a pension crisis that no politician can tackle.
Add in social tensions, a looming full-scale global trade war and potential geopolitical conflicts…
As my partner and friend John Mauldin wrote:
The 2020s might be the worst decade in U.S. history. As such, we have to prepare our portfolios for the worst. And history shows that there’s no better hedge against volatile times than gold.
Gold on Sale
Think about it.
In December 2007, right before the last financial crisis, you could have sold 100 shares of SPY (an S&P 500 index ETF) and bought 16 ounces of gold for your shares. A year later, your gold would have bought back over 210 shares of SPY.
That is crisis insurance at work!
Today, gold is even more undervalued.
It’s cheaper than it was in late 2007. You can get over 20 ounces by selling 100 shares of SPY.
Don’t give in to this stock market craze. It’s not the time to sell your gold and silver. Just the opposite — it’s time buy while precious metals are on sale.
That is what I am doing myself and I am confident it will pay off big time.
If you’re not sure where to start, check out this free ebook:Investing in Precious Metals 101: How to Buy and Store Physical Gold and Silver
Learn everything you need to make asset correlation work for you, how to buy metal (plus how much you need) and which type of gold makes for the safest investment.
You’ll also get tips for finding a dealer you can trust. It’s the definitive guide for investors new to the precious metals market. Get it now.
To golden opportunities,
Founder and CEO
Hard Assets Alliance