A quick update on markets, as investors are a little confused about what to think here and tend to overreact at the wrong time using emotions over and above logic and reality…..
I have gone out of my way to explain and actively warn clients on the developing market fundamentals in “bubbles everywhere” and how the world macro-picture is about to shift considerably under our very own feet.
However people tend to ignore the facts around them and concentrate solely on the immediate direction of market prices in front of them, hence wild moves always capture them by surprise.
The recent volatility is something we have predicted and planned for internally. We continue to reiterate that volatility “up and down” is literally going to explode over the next few years !
Market Low-Down Update as of 1st March 2020 – Historical Records Broken
As per my regular updates recent price action comes as no surprise whatsoever, we have walked into a significant industrial recession that has developed over the last 6 months that has now morphed into the greatest fall-off in industrial activity that can only be compared to the ‘shock of the 1st World War’.
Stock market investors and money managers have ignored these developments of the last 6 months, continually investing on the perception based ‘solely on the self-driven delusion, it’s different this time’.
Now that the ‘smell of coffee’ has finally woken investors from their ‘fairytale unicorn prognosis’ now facing the hard facts of the massive global “overreaction” of Covid-19 virus has resulted in huge falls in the stock markets.
Dow Jones for example has recorded its biggest one-day points fall in history as the coronavirus stock market sell-off gathered pace. The Wall Street index fell by 1,191 points, or 4.4% on 27th February.
Dow Jones fell over 3,500 points in just 1 week, the largest fall in history.
Metals following the same liquidity game plan as Year 2008 ?
Please remember this following quote before making any investment decisions and focus on time frames…..
As “Raoul Pal” recently stated “Gold is dangerous in an illiquidity event, but absolutely priceless in an insolvency event”, “the problem is, one more than often precedes the other…”
Considering the facts that Sovereign Governments, Banking System and Global Debt Markets are all recognised as supported by technically insolvent balance sheets and the fact that global sovereign central banks and governments only ammunition left is to devalue currency dramatically, then why investors into physical precious metals are worried about recent falls in metal prices is something I do find a little strange.
Let me explain quickly… Financial institutions suffer incredible losses in the stock markets, are then literally forced into raising cash liquidity as quickly as possible to pay for their margin calls on their recent losses (on the stock market holdings), the most liquid asset by far is gold !!
They sell precious metals with no regards to fundamentals whatsoever, just the head-long desire to raise cash.
Ignoring the Fundamentals – Cycle’s do not repeat exactly, But They Do Rhyme !
The wholesale difference this time around (compared to 2008) is the fact that the world has binged on debt tremendously since 2007, not only that but more importantly global governments have binged on printing currency units alongside completely destroying any yields you could earn on owning said debt or currency.
Meanwhile the global metals markets have also changed considerably, long-term appreciable global supply / demand deficits in precious metals have appeared conclusively (silver, palladium, rhodium and now platinum), the global mining industry has been pushed to the brink a long time ago with considerable and ongoing reduction in mine supply seen through mine pit closures and major company mergers (reducing costs alongside overall production cuts) to stay solvent and viable.
This presents enormous opportunities for medium and long-term investors into a diversified portfolio of physical precious metals in the face of currency destruction (physical over paper is going to be essential moving forward).
Meanwhile global governments and central banks globally continue the largest binge buying in gold ever recorded in history to diversify their balance sheets.
What to Expect ?
We strongly believe global central banks and sovereign policy makers are on the verge of a massive money printing splurge to attempt to save the system in the face of collapsing markets, an unprecedented industrial recession, global virus getting worse with the world frozen in panic, banking system insolvencies, etc, etc …..
Please note: This is not a scare everybody rigid article update, we told our clients that Monday 24th February was going to be a highly probable top in metals, and we advise on levels to buy as they fall.
We have explained to our clients that we have to expect very large revaluations in the metals moving forward over the next 4 years (pi cycle & wave targets) due to the macro-fundamentals and the new global acceptance of MMT (Modern Monetary Theory). This is a combination of debt monetization (QE on steroids) alongside extreme deficit spending (to misdirect the masses) in the face of the longest economic expansion in history coming to an end (USA for example is 128 months and counting as of Feb 2020).
It is our belief based on a great deal of analysis and our very long-term experience on asset market that precious metals will experience significant price increases over the next few years (wave target is into year 2024). However the metals will each move in different time frames based on their differing cycles, this will coincide with fluctuating and considerable volatility.
If you need any advice or help in your metal allocations then just give us a call.
Disclaimer : The information contained in this website should be used as general information only. It does not take into account the particular circumstances, investment objectives and needs for investment of any investor, or purport to be comprehensive or constitute investment advice and should not be relied upon as such. You should consult a financial adviser to help you form your own opinion of the information, and on whether the information is suitable for your individual needs and aims as an investor. You should consult appropriate professional advisers on any legal, taxation and accounting implications before making an investment.