Gold in 2019: This time Is Different
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
During the crash of 2008, mainstream financial analysts and pundits completely ignored gold. I wasn’t surprised; they came of age as financial professionals in a time when gold was regarded as a “barbarous relic” kept at Ft. Knox purely for reasons of “tradition.” Even Warren Buffet, the sage of Omaha, said gold served no useful purpose.
But by the time the dust began to settle at the end of 2008, gold was up for the year, while just about everything else was down. It was only up 2.7%, but compared to the craters left by other financial sets, this was a stellar performance. And then precious metals went on a tear that took gold to almost $2,000 per ounce in 2011â€”and made great fortunes for metals investors along the way.
Suddenly, “gold bugs” were to be envied, rather than ridiculed.
The critical importance of this is that it’s a recent and vivid memory. I’ve long predicted that the next time there’s a big scare, many of these same financial professionals who failed to take gold seriously as a safe haven would remember and act differently. Most of them are still around.
Enter the correction of Q4 2018â€¦
It’s certainly not true that mainstream investors flocked to gold in droves. It’s clear that relatively few did. But it was quite striking to me how often the subject came up.
I remember one talking head despairing about stocks falling again when the economy was doing so wellâ€”and that the only thing that was up was gold. That was a back-handed compliment, but it showed that gold is no longer to be ignored.
More important is that I saw several money managers, analysts and investors on such shows saying they were adding gold to their portfolios in late 2018, just to be safe.
And the data backs this up. We’ve seen gold break out of its usual inverse relationship with the US dollar over the last quarter. There were several times since last October when Wall Street was melting down and large numbers of investors went to cashâ€”and goldâ€”for safety.
In my view, this is clear evidence that precious metals aren’t just for gold bugs anymore. A large chunk of the financial mainstream now understandsâ€”and has directly observedâ€”the vital role gold can play in wealth protection, and even wealth creation.
My theory that things would be different next time is no longer just a theory: it’s an observed fact that many more investors today “get” gold.
This is obviously extremely bullish for precious metals going forward.
That makes the big question today whether the correction of Q4 2018 was just that, or if there’s more bad news for the broader markets aheadâ€”maybe even the beginning of a long anticipated bear market. Given how long the record bull on Wall Street ran, I’m inclined to expect more bad news than good for mainstream equities.
If I’m right about gold regaining its shine as a safe haven asset, 2019 could be a great year for precious metals and a spectacular year for gold and silver stocks.
Oddly enough, there’s a case to be made that even if the party on Wall Street kicks back into high gear for a timeâ€”if, for example, the trade war ends, sparking renewed optimismâ€”that would still be bullish for gold and silver.
I’ve written a free report on my outlook for precious metals in 2019, detailing all of the above and more factors.
I strongly encourage all metals investors to download my free report and give it some serious thought. It could make a big difference in how this year turns out for you.
I am certainly investing accordingly. I believe in putting my money where my mouth is. I will post a full track record of all my completed trades for the public to see and evaluate my results.
Meanwhile, this time already is different. That could make 2019 the break-out year for gold and silver that many of us have long been waiting for.