Still No Rush to Gold

With the tariff wars, the collapse of international order, Russia’s continued influence on all things political in the US, and a country split in half politically, it is hard to believe that the stock market will continue to enjoy full throated growth in the months or years ahead. Much more likely is serious deterioration in the health of the nation and, by extension, in the heartbeat of America – the markets.

And there is nothing on the horizon that warrants optimism. The Dow Jones has experienced impressive growth in the last two years, while more conservative investments, especially gold, have been treading water. Investors and corporations, heartened by a new tax law providing attractive goodies to them, continue mostly to wear eye shades to remain blinded to the serious state of affairs politically in the nation. And, it’s really not there fault. They are prospering.

But, it is not a rosy picture ahead, it isn’t even too early to suggest that the sky may be falling. Whatever your perspective on things political now, it is hard not to draw a conclusion that stocks will falter big time in the weeks and months ahead.

And, in this light, gold may again serve as an important hedge. It certainly did well in the recession of 2007-2009, rising double digits over stocks. Gold is widely considered to perform well in inflationary environments, and tariffs – especially those that are wide scale and broad in nature as are being implemented by Trump – often lead to global inflation. Therefore, 2018 to 2020 or so, may wind up to be another good period to make gold an important part of portfolios.

It’s just too compelling. In my mind it is almost too late to sell some stocks and buy gold. With tariffs about to hit and Mueller about to be removed, only a fool would ignore the safety net that gold provides. Folks are waking up now, and more and more gold will become an increasingly important component of portfolios in the days and weeks ahead.