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METEORIC RALLY: Gold Clinches $1,290!
There are very few people, who have been able to generate excess returns, compared with an index or a benchmark, for long periods of time.
It’s truly a rare breed that is consistently delivering better results, ALPHA, for themselves and their clients.
In 1982, Ray Dalio was dead-broke, so much so that his father was helping him out. Today he is worth over $21B in net worth. Bridgewater Associates, the hedge fund that he founded, went from two employees to over 1,500 brains today.
This is the latest public data on the GLD, which is the SPDR gold ETF. You can see that Bridgewater is the 7th largest holder of paper gold, with John Paulson’s fund, the one that shorted Fannie and Freddie in 2008, making him a fortune, coming in at number six.
Without a doubt, Dalio senses a massive opportunity with precious metals because two of his biggest positions (1) The Royal Bank of Canada and (2) The Toronto Dominion Bank, both stand to gain enormously in a commodities bull market, which Canada’s economy is largely dependent on.
With the overall MSCI World finishing 2018 down 10.3%, with Emerging Markets falling 16.8%, and with 93% of global assets down for the year, including the worst December of the S&P 500 since its 1957 inception, funds and institutions can’t afford to stay LONG the usual suspects, the FAANG stocks, especially with Apple’s huge, one-day drop, due to disappointing news.
Investors are desperate to find a strategy that works. With bond yields coming back down and inflation continuing to tick up, we’re getting closer to a world of negative real rates.
This is the ideal backdrop for a precious metals bull market.
Courtesy: U.S. Global Investors
There’s no doubt that sentiment hit a multi-year low in August of this year.
Even the Vanguard fund changed the name of its precious metals fund to “Global Capital Cycles” to attract investors, but as is always the case, extreme fear marks the bottom, since no one is left to sell.
A new bid begins to take hold soon thereafter.
Gold is a unique mineral, a very special commodity, since it has very few industrial uses. For the most part, it is used as jewelry. Its natural characteristics, though, have been so fitting for human society in the financial sense because it is so indestructible, finite, and rare, and it has just the right traits to be used as money.
Silver has met these same requirements to be used as money over the centuries, but in recent decades, it has been found to be applicable for thousands of modern-day industrial uses as well.
Nonetheless, they both continue to draw a bid from investors, who understand their worth in the context of the inherent risks, surrounding fiat currencies, geopolitical tensions, counterparty risks and inflation.
For precious metals to trade even higher, the historical catalysts have been low-interest rates, trending lower, a weak dollar, and a stock market bust.
In 2018, we saw the markets beginning to falter. The dollar was the best asset out there, as a result, yet gold and silver were rallying in spite of this, which is super-critical and demonstrates strength. Even better, we know that in 2019, chances are the USD will snap its winning streak, furthering the case to own precious metals.
Lastly, the FED is under immense pressure to leave rates as is, even to cut them back in 2019.
Yesterday was legendary for us, as we saw a truly incredible trading session and in 2019, we will do everything to make sure we have opportunities to experience many such rallies on numerous occasions.
Governments Have Amassed ungodly Debt Piles and Have Promised Retirees Unreasonable Amounts of Entitlements, Not In Line with Income Tax Collections. The House of Cards Is Set To Be Worse than 2008! Rising Interest Rates Can Topple The Fiat Monetary Structure, Leaving Investors with Less Than Half of Their Equity Intact!