Loading ...Can gold and silver really fail when stocks and bonds fall?
Posted on 24 September 2014
If the Fed holds its course this autumn then a day of reckoning is coming both for stocks and bonds. For stocks basically the money will run out, the QE lifeline is cut. For bonds higher interest rates are toxic
In such circumstances can the precious metals really fail to rally as safe haven options? This is not 2008-9 when interest rates fell through the floor and boosted bonds to the immediate detriment of gold and silver.
Toxic interest rates
What is left for investors when their known universe of stocks, bonds and let us not forget real estate take a pasting? It’s always been the same in any money bubble in history: gold and silver are the only winners as the money that the central banks can not print.
The giant, debt-fuelled investment bubble pumped up since the global financial crisis by the central banks is like any other bubble in history. It will have to be purged from the system.
The foolish thing to imagine is that the central bankers will be in charge during this unwinding process. They can try to help banks here and there but the lesson of history is that when the markets take over then the central bankers are exposed as manipulative charlatans with no real power.
It is not really going to be any different this time is it? The problem for the naysayers is that central banks always look more and more omnipotent until they suddenly are not. The consensus is utterly convinced these guys can walk on water until they fall in and drown.
Good timing
Gold and silver holders have the right asset at the right time eventually. Holding US treasuries or stocks that are both in huge valuation bubbles right now will be seen to be sheer lunacy with the benefit of hindsight.
Never before will so much be lost by so many in this correction. Holding the antithesis of these assets makes excellence good sense and indeed many rich investors around the world are stocking up on precious metals, not least of whom are the central banks who of course know exactly what is coming.
Remember too that the US dollar will quickly reverse when its bond market crashes.