Record Low Yields and Monetary Policy to Push Gold Higher
As I have been noting for nearly 6 months (before anyone even saw it coming), the yields in the US (and the entire world) are shooting lower and lower. I forecasted the US 10 year to go below 1.000 before Q2 2020 and that is exactly what we are seeing. The 10 year US yield is highly correlated with a belief on inflation, and an increase (or lack there-of) in domestic and global growth, and it appears the bond market believes that inflation will eventually tick up as rates start to approach negative territory; similarly the bond market also believes global growth will be muted or contract.
Nonetheless, this is the time you want to own Gold if you have been questioning it before. This is not the time to short it when central banks around the world are collaborating more and more cuts. Silver is an excellent play as well, however, I believe out of one's "precious metal distribution" that Gold to Silver should be a 70 to 30 or 65 to 35 ratio respectively.
Pending monetary policy and the state of the coronavirus, we could see a correction at 1730, or we may not have a more major correction until 1820. I will be posting updates as we continue to see subsequent economic updates regarding the virus and the epidemiological facts surrounding the state of the virus domestically and internationally.
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I have received a ton of DM's regarding what is the best way to play Gold.
- Best senior miners: Newmont (NEM) and Barrick (ABX/GOLD)
- Best junior/mid miners: K92 Mining (KNT) and Eldorado Gold Corporation (ELD)
- Best royalty company: Franco-Nevada (FNV)
- Low risk individuals: Any Gold bullion ETF on a 1:1 movement ratio
- High risk individuals: JNUG/NUGT (I'm not a fan of leveraging miners as any liquidity shock to the equity market could result in a counter-intuitive downward selling pressure like we saw last week)
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zSplit
FAQ
Q1. When will Silver start to go up?
A. Silver is known to tip-toe alongside Gold and eventually gets going 2-4 weeks after Gold starts running. Silver is worth investing in, however i advise not to leverage Silver as it is extremely volatile and it becomes very easy to blow your account if you are not careful. Silver should start moving more sharply when Gold breaks 1700.
Q2. What is your target year-end for Silver and Gold?
A. Silver: $24; Gold: 1950-2000+ depending on the economic impacts of the virus and containment, or lack there-of.
Q3. When could we see the next sharp correction in Gold?
A. 1730 may see a retracement. 1820 is more of a likely spot for a larger correction. However, the entire Gold market is pending how the virus impacts the global economy and whether central banks continue cutting interest rates. How the bond market views the state of the global economy and inflation will also play a role.
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Very Common Question
Q. What can I invest in for the equity market given the volatility?
A. Play defensive. This is not the time to act like a hero. You want to be in high quality dividend stocks such as utility stocks and diversify away from the US a little bit and into Canadian stocks which offer tremendous stability.
Utility stocks such as Fortis (FTS) and NextEra (NEE) are some of my favourites; Waste Connections (WCN) is also a tremendously stable stock with excellent growth over the near, mid and long-term and deemed the top Waste company in the world by many portfolio mangers and hedge funds.
For now, stay away for momentum based stocks with low to negative EPS and depend on supply chains for 'selling products' directly to the consumer.
Nonetheless, this is the time you want to own Gold if you have been questioning it before. This is not the time to short it when central banks around the world are collaborating more and more cuts. Silver is an excellent play as well, however, I believe out of one's "precious metal distribution" that Gold to Silver should be a 70 to 30 or 65 to 35 ratio respectively.
Pending monetary policy and the state of the coronavirus, we could see a correction at 1730, or we may not have a more major correction until 1820. I will be posting updates as we continue to see subsequent economic updates regarding the virus and the epidemiological facts surrounding the state of the virus domestically and internationally.
--
I have received a ton of DM's regarding what is the best way to play Gold.
- Best senior miners: Newmont (NEM) and Barrick (ABX/GOLD)
- Best junior/mid miners: K92 Mining (KNT) and Eldorado Gold Corporation (ELD)
- Best royalty company: Franco-Nevada (FNV)
- Low risk individuals: Any Gold bullion ETF on a 1:1 movement ratio
- High risk individuals: JNUG/NUGT (I'm not a fan of leveraging miners as any liquidity shock to the equity market could result in a counter-intuitive downward selling pressure like we saw last week)
--
zSplit
FAQ
Q1. When will Silver start to go up?
A. Silver is known to tip-toe alongside Gold and eventually gets going 2-4 weeks after Gold starts running. Silver is worth investing in, however i advise not to leverage Silver as it is extremely volatile and it becomes very easy to blow your account if you are not careful. Silver should start moving more sharply when Gold breaks 1700.
Q2. What is your target year-end for Silver and Gold?
A. Silver: $24; Gold: 1950-2000+ depending on the economic impacts of the virus and containment, or lack there-of.
Q3. When could we see the next sharp correction in Gold?
A. 1730 may see a retracement. 1820 is more of a likely spot for a larger correction. However, the entire Gold market is pending how the virus impacts the global economy and whether central banks continue cutting interest rates. How the bond market views the state of the global economy and inflation will also play a role.
--
Very Common Question
Q. What can I invest in for the equity market given the volatility?
A. Play defensive. This is not the time to act like a hero. You want to be in high quality dividend stocks such as utility stocks and diversify away from the US a little bit and into Canadian stocks which offer tremendous stability.
Utility stocks such as Fortis (FTS) and NextEra (NEE) are some of my favourites; Waste Connections (WCN) is also a tremendously stable stock with excellent growth over the near, mid and long-term and deemed the top Waste company in the world by many portfolio mangers and hedge funds.
For now, stay away for momentum based stocks with low to negative EPS and depend on supply chains for 'selling products' directly to the consumer.
For those who follow my ideas I have been voracious and specific in that people should not invest in leveraged funds nor should they short or day-trade because these are pure gambles and can result in a quick gain to a massive loss.
All dips in Gold are buying opportunities, however, I advised people (and still advise) people to be more into physical Gold (or physical Gold ETFs on a 1:1 basis) rather than even mining stocks as mining stocks are still impacted by falling equities.