Today’s the last day of our special ‘stop press’ publishing schedule. Your normal service will resume tomorrow.
Thanks for reading, listening, and tuning into our videos. We hope you got something useful out of it.
If you missed last night’s roundtable discussion between myself, Shae Russell, and Dan Denning, you can catch up here. In it, we discuss the historic market meltdown, secular versus cyclical bear markets, the coming flood of money and the opportunities that will come for brave investors.
Given the smackdown we saw in gold stocks in the days prior to our discussion, we focused particularly on the opportunities in this area.
I made reference to the similarities to 2008 in gold.
Back then, the gold price fell 30% from March to October 2008. At the same time, the benchmark gold stock index, GDX, plunged 70%. It created a historic buying opportunity in gold stocks. In the following three years the index soared over 300%.
This time around, the gold price peaked in March too. In just over a week, it’s down around 12% (things are moving fast!). GDX peaked a few weeks earlier. But at the low on Friday 13 March, the index had fallen nearly 50%!
That’s an even bigger move relative to the gold price than you saw in 2008.
Aussie gold stocks fared even worse.
While the Aussie dollar gold price only fell around 5% in the recent rout, the ASX Gold Index plunged 35% at the low on Monday, 16 March!
In the video, we discuss a liquidation event that may have led to this gold stock price plunge. Given the moves were well out of proportion relative to the underlying metal, we know something out of the ordinary happened.
But with the strong bounce in gold stocks you saw yesterday (which continued overnight in the US), Monday may just have been the panic low for gold stocks.
If you want to know how our gold stock guru Shae Russell is playing this gold stock fire sale, click here.
We cover much more than gold in the video. It’s (hopefully) a thought provoking conversation. As I said, we hope you find it useful…
Speaking of useful, read on below for a message from Dan Denning. Well, it was a message to me. But Dan’s fine with me sharing it with you. In it, he mentions a ‘Crisis Money Guide’ he and Bill Bonner put together for their US readers. It’s just as useful for Aussies, so we’re making it available for you too.
Read on for Dan’s message, and click the link below to get the guide. It’s yours to keep, with our compliments…
Thanks for organising yesterday’s crisis market summit with Shae. I found it really useful to sit down with you guys and just talk over what’s happening, especially with gold. I also noted one YouTube commenter didn’t want to have anything to do with stocks right now!
That’s understandable. There is so much fear out there still. And so much uncertainty. A society wide (or world wide) lock-down of months is almost unfathomable (dare I say massively disproportionate to the threat at this point?) Makes you wonder…
In any case, I also wanted to let you know about something Bill Bonner and I put together for our readers in the US. It’s called ‘The Crisis Money Guide’. I know that not all your readers are investors. And not all investors have the means or the interest to take the plunge on gold stocks right now (although these are precisely the emotional conditions in which you can get massively rewarded for being brave IF you can manage the risk).
The guide has mostly US informational resources. But it might be useful to your readers. And at this point, anything we can to be useful and helpful is good.
A final note: It’s really hard to step away from the news cycle and look at the big picture. So much changes by the hour. And there are so many rumours. But I did sleep on it last night and one thing seems clear (at least to me)…
The pandemic has accelerated many of the financial and social trends we’ve all been writing about for years. Universal Basic Income has arrived early in an unexpected guise, as relief for people who can’t go to work or lose their jobs from the lock down. It will be here to stay.
The same could be said for Modern Monetary Theory. The idea of a government debt-to-GDP ratio being a real constraint on emergency spending will simply go away. Governments will borrow through the bond market and central banks will print to buy it. Or, governments will simply sideline the borrowing part and ‘print’ money to give to people.
I say ‘print’ but we may see the rapid emergence of central bank digital money. You don’t even have to mail a check. You just debit a bank account or issue a debit card. This money, unlike cash, can be tracked, tagged, and taxed (it can also come with an expiration date so that people HAVE to spend it each month, not save it).
It’s also clear to met that mobile phones or RFID technology are going to be used to track people’s whereabouts and enforce self-isolation or lockdown. It’s happening in Hong Kong already. In some ways, the whole response seems like a dress rehearsal by those in favour of an authoritarian state for taking over complete control of society and the economy.
Yet it is an unprecedented crisis. And what I really hope — and please pass this on to your readers — is that everyone is safe and surrounded by friends and family. There is more to wealth than just money. You have family, friends, and community. And if any good comes out of this, we may put down our phones long enough to rediscover real connections with real people.
PS: Assuming markets don’t get shut down, we’re reaching that point where even if you’re disinterested — heck even if it’s the last thing you want to do — you should consider buying opportunities. Only with money you can afford to lose. And only, in my opinion, on investments that are leveraged to what’s going on.
PPS: What’s going on, in case I muddled it, is an all out explosion in paper money and government debt. Short of gold being outlawed (again, in the case of the US) I can’t see how this doesn’t result in much higher gold prices. If that happens, all things being equal, that SHOULD be great for gold miners.