Is Trump Coming to Save the Economy?
…and should you wait to buy gold until he does?
Many people think (correctly, in our opinion) that precious metals are crucial for difficult economic times. True, they move opposite the market frequently, providing a measure of balance and stability to your portfolio. But is it also true that if you're in a tough economy already, it's too late - or too early - to get into precious metals? Should you sit on the sidelines and wait for better days?
Maybe it is more complicated than that, and waiting could be a terrible mistake.
Is the economy really at rock bottom right now? And if Trump beats back all of his legal challenges and triumphs in November, will the economic dark clouds lift, bringing the prices of gold and silver back down into the ranges of yesteryear? Is he going to somehow magically figure out how to pay off the debt, tame inflation, balance the budget, fix the money supply, restore the dollar's image on the world stage and make it good as gold again? All in 4 short years? Are you waiting for all of those stars to align before you make your moves into precious metals?
It could be that is a lot of wishful thinking. It would be nice if even some of that came true, even if he made some small moves in the right direction. But do you think world class investors like Warren Buffett rely on wishes and dreams for their financial moves? Or do they look at indicators and fundamentals?
First of all, you should consider what happened to gold prices in Trump's first term. He had a pretty strong economy until the lockdowns of his 4th year. Gold still went up. Gold went from $1,131 an ounce in December 2016 after the elections and reached $1,893 an ounce 4 years later in December of 2020, peaking at $1,957 in July of 2020. Yes, Covid and the so-called "Summer of Love" drove prices higher, but consider that in February 2020 - when those events were still unimaginable - gold was already at $1,640! That is an increase of 45% during the good times of Trump's first 3 years, then rising nearly 70% by the end of his term.
Next, let's consider a screaming indicator that has a historic 91% accuracy in predicting recessions. The yield curve.
The Yield Curve has predicted every recession since the 70's. It has NEVER been this inverted...
Only a crystal ball could be more accurate. Or a newspaper from the future... Look at this chart.
Every time the purple line dips below the red line, a gray bar follows. What does this mean?
The purple line is the spread between short term and long term bonds, referred to as the yield curve. The red line is 0.00% yield. Anything below that is negative, or an inversion.
The gray bars are the recessions.
Now look all the way to the left where the purple line is today. 2024 is shaping up to be one heckuva ride. Are you prepared?
Finally, what ARE the elite investors doing right now? Wishing and hoping? Or planning and strategizing?
People watch the movements of the "Oracle of Omaha" like a hawk. Warren Buffett clearly knows what he's doing and he knows how to spot trends and prepare his positions strategically. He has sold a staggering $28 billion worth of stock this year.
Perhaps Warren Buffett sees that stocks are overvalued. All of the money printed during the pandemic had to go somewhere, and a lot of it went to stocks, pushing prices sky high, vs value and fundamentals. Now that the pandemic is in the rear view mirror, the tide is potentially receding and we could be about to see a pretty big crash.
Maybe that is what Warren Buffett suspects... And he's betting $28 billion he's right.
Meanwhile, there are lots of reasons to believe there is fundamental value in precious metals right now. Bank of America and many other financial analysts are bullish on gold. Central bank demand is at a record high, which is a big driver for gold prices as central banks soak up supply and tend to hang on to it for long periods of time.
So is Trump coming to save us? Should you wait to see how November goes before you get into precious metals? I can think of 34 Trillion reasons to own gold NOW.