This Is It!
The comments below are an edited and abridged synopsis of an article by Egon von Greyerz
The party is over. The world is facing a grave economic and social downturn. We are entering a period of global crisis that will change the world for a long time to come. This should come as no surprise to the people who have studied history, but since the media never talks about the excesses in the world or the risks, 99.9% of people are totally unprepared for what is coming next.
Up for discussion: the Dow; stocks, bonds and property; coronavirus is not the cause but the catalyst; and good news/bad news for investors.
Investors in precious metals are nervous, because gold is volatile. This is similar to 2008, when precious metals and the miners initially sold off strongly before they continued the rally. It is possible that the metals will correct further before they resume their uptrend, but the correction will be much smaller than in 2008.
In many currencies, like British pounds and Australian and Canadian dollars, gold is reaching new highs. It won’t be long before gold in US dollars will also reach a new high.
There is no doubt that gold and silver will reflect the coming problems in the world economy and especially the guaranteed currency debasement that will take place due to unlimited money printing.
The Dow:gold ratio tells the story. Since 1999, the Dow is down 65% against gold, yet almost no stock market investor is aware of this fact. The Dow is down 30% against gold since October 2018, and has already fallen 15% in 2020.
Von Greyerz expects the ratio to initially reach the 1980 level of 1:1. What the levels would be is hard to predict, but let’s say Dow 10,000 and gold $10,000. Eventually he sees the ratio falling below one to 0.5 or lower, which would be in line with the long-term trend line. But even if the ratio fell to one, it would involve stocks losing 94% against gold.
So it’s simple. Get out of stocks, as well as other bubble assets, and buy physical gold as the best form of wealth preservation and insurance against the worst economic downturn in modern times.