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Commentaries & Views

Apologies for not getting this issue to you quicker.  Things have been moving fast and I kept rewriting and updating (and, yes, lengthening) the editorial that makes up the bulk of this issue.

It’s hard to deal with the current situation short form, because there are so many moving parts.  Having now (I hope) laid out something of a framework, I plan to put out a few issues closer together that will deal with one aspect of the crisis or another, rather than trying to update so many things at once.

There are few “real” updates in the issue, meaning few new results.  News releases in the past two or three weeks have been almost exclusively announcements that exploration/development work has been shut down or delayed, usually due to regulations imposed by local governments. That will be the bulk of the news for the next while, except for a handful of companies still working at reduced levels and/or with samples in the lab.  Most analytical lab groups are operating only at a small subset of their locations at reduced staffing levels to maintain social distancing.  Still, there should be some results coming from a handful of companies during the next month.

While this is is a scary situation for everyone, I remain optimistic we’ll get through this. Not unscathed perhaps, but still strong and ready to move forward. Hang in there. 

Eric Coffin

“Bottoms in the investment world don’t end with three or four year lows, they end with ten or fifteen year lows.”

Jim Rogers

While its not explicitly stated in the quote, Rogers was referring to full-scale bear markets.  There are plenty of corrections that do, in fact, end in four or five year, or less, lows. Those markets don’t get remembered like the one we’re in will.

As you know, I was expecting a recession this year.  I expected one in late 2018 as well.  We came very close to both a recession and bear market then.  It was only Fed loosening that saved the day and stopped the Wall St fall right at the 20% mark. 

No such luck this time around.  My expectation, before the virus came around, was for a mild recession, probably two quarters only, and a “bear market lite” with a decline of, say, 20-25% or so.  Enough to freak out the inexperienced, but nothing you wouldn’t expect at the end of any normal market cycle.

The past couple of months have thrown everyone’s assumptions out the window, mine included.  We can draw comparisons, draw charts and draw conclusions but the truth is that there isn’t anything to relate the current period to.  There’s no simple example you can point to help people understand how this situation will

I’m not saying it’s the end of the world. It’s not, though it may feel like it some days. I’m saying that there aren’t any good comparables.  I think inter-market relationships that  defined the behavior of market participants for the past 10 or 20 years are going out the window 1too.  A lot of what worked until a month ago isn’t working now and may not work again.  Lots of investors, including some of the most well-known, gonna get schooled.

There aren’t many assumptions I’m comfortable with in this environment.  One that I am, however, is my previously stated belief that the gold sector will be one of the main winners in the current scenario.  It won’t go up in a straight line.  I expect a lot of turbulence near term in gold stocks, like all other stocks.  But I’m confident the path of least resistance is much higher gold prices going forward.

The graph above shows the growth in the US Fed balance sheet over the last 13 years.  Look at the expansion in the past couple of weeks.  During that period, the balance sheet has grown by about $1.6 trillion. That’s more than the entire “QE2” period.  And that total doesn’t include the vast amounts of asset buying the Fed has committed to, just the buying it’s already done.

No timetable for work from home and social distancing orders means no timetable for how long the Fed will have to be “the bid” across numerous markets, especially credit markets. Damage already done means it’s highly likely the Fed balance sheet ends up at $8-10 trillion before the year is out. Other central banks are undertaking their own efforts and buying assets in their home markets to shore things up.  Markets will look a lot different when all this runs its course.

With markets getting upended everywhere, assets that are divorced from the financial system are seeing increased demand. Investors have no road map for how things will play out so many are looking for holdings with no counterparty risk.

With “financialization of everything” that occurred in recent years, not many assets or asset classes stand on their own any more.  Precious metals are among the very few that do.  The gold chart on the previous page is impressive when you understand the scale of liquidation and deleveraging that’s been going on since Wall St topped. Gold declined less than just about anything else and has been able to move up  in tandem with both equities and the USD.  Its been showing strength against everything. 

Aside from the highest quality bonds and, to a lesser extent, the US Dollar, gold is really the only bull market out there right now.  Keep that in mind during some of the difficult market days that are surely still to come.  Truly, in the market sense, you’ve come to the right place if you’re in gold.

I stuck my neck out in an Alert a couple of weeks ago, stating the $1450 level was the bottom for gold.  I still think it is, even while acknowledging that anything can happen in the short run. The macro backdrop for gold is too favorable for me to get stressed about short term volatility. 

I think the margin call selling and liquidity seeking for the gold market itself, and perhaps the broader market too, is done. That theory will be tested if we have a couple more really bad market days.  We’ll want to see gold selling off less than competing asset classes.  Whichever way that pans out though, it doesn’t change the longer-term narrative.  I think gold’s going a lot higher.

The massive central bank balance sheet expansions are now getting matched by fiscal expansion.  The deficits we’re about to see across the G8 will freak many people out, but I think they’re a necessity.  The monetary expansions underway are about protecting and underpinning markets.  They won’t do the average person much good, at least not directly.  The massive job losses and dislocations, short term or not, can only be addressed by fiscal spending.

The graph above shows the fiscal balance (expansion or contraction of fiscal spending) for the major economies.  You can see how large the current reaction to the crisis is, compared to 2008-2009.  If the GFC taught governments anything, it’s that they didn’t move fast enough.  You can’t fault them for that this time, at least not at the central bank level. And the chart is already out of date, with the current fiscal expansion already larger than shown.

To be clear, what we’ve seen so far is just the “phase I” fiscal response.  There will be more where that came from.  As this issue was being finished, Trump floated the idea of a $2 trillion infrastructure bill, and the Democrats are working on the “next stimulus package” already. You’ll be seeing similar news from other G8 governments.  We’re about to see deficits like we’ve never seen before. 

Since most US states are lengthening their “isolate at home” orders its unlikely the first $1200 payment going out to US adults will be enough. I don’t know what’s politically feasible, but a more realistic number would be higher than that.  You can get holier than thou about it (with some justification) but that won’t keep people fed. I hate the deficits getting created but I think this fiscal expansion is a necessity.  There’s going to be plenty of misery to go around, even with fiscal support.  Without it, a new depression would be a real possibility given the scale of the (hopefully) short term job losses.  

We’ve already seen 10 million initial unemployment claims in the US in two weeks. The final total will depend on how long the stay at home orders last, but I’d be surprised if its under 20 million unless shelter at home orders are reversed in a few days.

North America is a couple of weeks behind Europe on the viral outbreak curve which, in tis turn, is a few weeks behind Asia.  For a glimpse of what’s coming for North America, look at the chart on this page.  It shows current service sector (most of the economy) Purchasing Managers Index for four major Euro countries.  Take a good look.  Odds are you’ll never see a chart like this again.  PMIs have fallen off a cliff.  That’s what happens when an economy goes into lockdown.
(As an aside, I want to point out that a surprisingly large number of financial journalists and editors/bloggers don’t understand how PMI readings work.  These are diffusion indexes, meant to measure changes from the prior month’s reading, with a rating of 50 meaning “no change in the past month”.  They are not absolute measures. 

So, Italy’s Service PMI reading of 17 means it’s purchasing managers are seeing about a 70% reduction in activity compared to the previous month.  The confusion about how these readings work is why so many assume China “cooked the books” with  its latest readings in the low 50s. I wouldn’t be surprised if they did fudge them, but that low 50s reading is not the “big improvement” from February it was portrayed as in the press.  Quite the contrary.  A low 50s reading means the horrible situation in February got a little bit better –but not much- over the succeeding month.  Ok, end of rant.)

It’s clearly too late to hope for a shallow recession. The best we can hope for at this point is something with short duration as we already know the amplitude is going to be historic.  Estimates of Q2 US GDP growth range from –20% to –40%, numbers never seen before. Honestly, its hard to even get your head around numbers like that. The big hope is that the drop in growth, and the virus, is isolated.

Things aren’t any better for the rest of the G8 as most have tougher self isolation restrictions than the US. The potential saving grace from some of them, in the near term at least, is more generous social safety nets.  That would generate larger government deficits but should allow for higher private sector consumption coming out of this—assuming the citizens of those countries can find stores that are open. 

Even if we get “lucky” and come out the other end of this during the summer, one quarter of lockdown and its immediate aftermath will do a lot of damage to the economy.  Full year growth will be several percent in the negative category, worse than the Financial Crisis.

Most important now will be how fast we bounce back from that. I’m assuming there isn’t another wave of virus or at least that we create some decent treatments, antibody testing to allow those with immunity to get back to their lives and, ultimately, a  vaccine.  Even with those optimistic assumptions, I don’t expect the sort of quick return to former highs Wall St seems to still be imagining. 

Most countries are using some of their fiscal support to help small businesses, but I still think many will fall through the cracks. Most small business owners don’t have the capital to maintain operations through a two month shut down.  Even if they do, I expect some permanent, or at least lasting, behavior changes.

Older citizens are going to be wary about crowded spaces for a while, and worried about decimated retirement savings.  Odds are they cut back spending to make up for this.  If the big markets don’t regain all their losses right away, the cumulative impact of reduced spending will turn some layoffs and furloughs into permanent job losses. Especially in recreation, dining and tourism.  Those are big sectors.

I certainly hope I’m being too paranoid here.  I own, among other things, half a conference business after all. I don’t love the idea that people won’t want to group up in person for a while.  If we get a good antibody test, that will help a lot. I suspect this virus spread much more widely than the official numbers. If lots of younger people turn out to have antibodies already, that would speed the recovery.  An effective vaccine would get things back to normal quickly, but even optimists don’t expect one before 2021.

While its still too early for the readings to be definitive, a look at some Chinese economic stats can give us a feel for the potential path out from the virus peak.  The chart above shows several measures of economic activity since the start of the year in China.  I don’t know if it was seasonally adjusted to account for Chinese New Year which itself causes huge swings in the data and almost coincided with the Wuhan lockdown.

I’m as skeptical as the next guy when it comes to Chinese government stats, but most of those in the chart are independent readings.  Housing sales are off 35%, which is ugly, even if its “edited” which it might be. 

Coal consumption, a proxy for industrial activity, is off almost 40%.  There are antidotal stories about factory managers keeping assembly lines running so the bureaucrats that monitor power consumption could report “positive” momentum in Beijing.  Even accounting for that, coal consumption implies no quick bounce back.

Metro passenger counts are probably a better read on how many are actually going to work again.  That measure does show some clear post-lockdown improvement but is still 50% off pre corona levels. Workers could be trying to find less crowed ways to get to work though. The theatre box office reading is zero because theatres are still shuttered as are music venues and live music performances in clubs and bars. A lot of things are “almost” back to normal, but Beijing remains wary of the potential for new outbreaks.  I don’t think I’d be buying US theatre chain stocks any time soon based on those numbers.

Overall, the chart indicates that the Chinese economy is struggling, but slowly getting back to normal.  Part of the problem is that most of its offshore markets are now in varying stages of lockdown themselves.  It sounds great, in theory, that Beijing has told factories to go back to 100%, but it doesn't mean much in practice if those factories have no orders to fill. 

Before you despair too much, remember that it hasn’t been a month since the shutdown in Wuhan/Hebei ended.  And most areas appear to be a gradual restart, by design.  I wouldn’t expect an immediate bounce back in this scenario It’s too early to say is not coming back “quickly”.

I expect the path will be much the same for the rest of the G8.  The potential “good news” for North America is that it will be coming off the worst of the virus curve last, and the US is a mainly domestically focused market.  And, there may be some offshore buyers again that can help the US bounce better than China. 

Even so, things will be rocky for a while even though the virus appears to be peaking quickly. Large countries like the US and Canada could have an added advantage.  So far, there are large areas with no local “hot spots”.  Those areas may bounce back faster.   A slow return to normalcy has several implications for different markets.

The SPX chart above isn’t pretty.  The speed of the decline from the all-time high is a record breaker.  Even so, things could be a lot worse, the question is whether they will be.  During the GFC, the SPX dropped by 55% before finding its bottom.  It took about 18 months from top to bottom. 

We’re barely a month into this thing.  I’ve been surprised how many commentaries I’ve seen treating the recent 2191 low for the S&P as the probable bear market bottom.  It will be nice if that turns out to be true, but it’s too early to make that assumption.

Even though I’ve already stated the GFC isn’t a great comparison, I still think the way that bear market unfolded could be instructive. 

The market evolved quite differently then. The “smart money” was getting out for several months in 2008 before things really crashed after the Lehman bankruptcy.  The market topped four months before Lehman and was in correction territory before the wheels really came off.  This time around, the market went from all-time high to correction in four trading sessions and hit bear market (-20%) territory in three weeks.

For our purposes, its what happened after Lehman that may be most instructive.  It took six months for the market to actually bottom after the “Lehman crash”.  It was a grinding move that included a couple of significant bear market rallies—one of over 30%, before the final low was reached in March 2009. 

Few thought we’d see another general market decline to rival that one so soon.  Its still too early to know if we will, though I’m personally leaning towards this market event having the same scale.  Why?  Because of the sort of knock on effects mentioned earlier in this article. 

Most business failures aren't instantaneous.  Entrepreneurs naturally try to hold together their creations and don’t go down without a fight.  Larger organization have more assets to draw on, though they often have more commitments (health insurance, pension contributions, etc.) to fulfil. Bigger companies should still come through this better than small ones, but the casualties are going to be widespread.  I expect spenders to be cautious which means more of an “L” shaped than “U” shaped recovery.  I’ve already given up on the idea of a “V” shaped one, though I’d love to be proved wrong on that.

To me, the dislocations and job losses just look too big to allow for a “mild” bear market, even if the layoff/furlough period turns out to be shorter than feared.  I believe that partially because I think the market was getting pretty overvalued before the crap hit the fan.  My 50% estimate of overall S&P decline rests, in part, on my assumption that part of that is just getting back to a reasonable base value, then taking the effects of covid-19 into account.

The chart above shows market bubbles in the past 50 years, from gold to Tech and Housing and, finally to “Disruptors”, as the Bank of America that generated the chart calls the latest episode.  That suggests FAANG stocks, though I think a number of leverage products, both private label and better-known ones like levered ETFs can be added to the mix.

The current “everything” bubble was much larger than its predecessors.  As anyone who’s been through a bubble can tell you, the adage about markets “taking the stairs up and the elevator down” are very true.  The current market is a glaring example.  I think that’s at least partially due to overvaluation and a high degree of leverage going into it.   The massive market swings last month were due as much to deleveraging as they were to the virus news itself.

Bear markets and recessions are capitalism’s way of wringing out excesses, and there have been plenty of those lately.  One that’s particularly irksome for me is the tsunami of share buy backs in the past few years.

(see  from HRA Journal Issue 303).  This is not only a form of approved insider trading, its been behind a lot of the huge buildup in corporate debt in the US.   This is one area of concern for me that I think is about to come home to roost.

Since the GFC, corporate debt in the US has increased by about $6 trillion, to just over $16 trillion.  It would be nice if most of that money went to ground breaking investments and capital improvements.  Not so much.  I think most of it was borrowed by companies that then turned around and spent the money on share buybacks.

I’m not going to harangue management groups alone on this subject.  They were doing what their investors and Wall St wanted. Companies that engaged in heavy share buybacks got rewarded by the market for it.  Plenty of companies levered up their balance sheets to do it though, which is where the problem comes in.

The chart above shows US corporate debt broken down by quality tranches.  Note that the “BBB” tranche, the lowest tranche above junk bond status is, by far, the largest. Some of this is US oil producers, chiefly frackers, but a lot of it was taken out by companies that spent the money on share buybacks.  That money’s gone but the debt still has to be dealt with.

Notwithstanding the large bounce oil had at the end of last week, it’s a market in real trouble.  OPEC and Russia need to get a lot of producing countries on board with big production cuts. Short of that, the move back the high $20s per barrel will be just a trading bounce.  A lot of the fracker’s debt load is and was junk, but some of the bigger companies are still BBB and subject to down grade.

The potential problem here is that the “junk” space is a lot smaller than the investment grade space.  Many large bond market investors like funds and insurance companies have strict limits on how much junk rated debt they can own, and the limit for many is “zero”. 

If the current situation goes on long enough to cause widespread balance sheet deterioration there could be a cascade of downgrades.  I don't think the junk sector could handle it if there were one or two really large downgrades. It’s just not big enough.  It could only absorb large amounts of new debt at lower prices. 

The chart above shows that the JNK junk bond index has already taken a hit. It’s off almost 20% even while the whole yield curve shifted down by over a percent.  Lots of traders suddenly want nothing to do with junk bonds.

The potential for downgrades and defaults in the credit markets is where the real damage could be done in the next few months.  The Fed is well aware of that, which is why it invented so many new facilities to allow it to underpin corporate debt markets and buy debt directly or take it on as collateral against Treasuries.

Washington's first stimulus bill does have money to help ease credit markets.  The combination of monetary and fiscal was enough to draw traders back into the high yield market en masse last week.  That may forestall some problems and allow some companies to refinance and avoid credit downgrade.  That’s a hopeful sign though we need to see how much longer-term revenue, profit and job losses ensue through Q2 and Q3.  At a market sentiment level, I find it a bit disquieting that traders returned to bullishness so quickly.  The herd’s first instincts tend to be wrong at times like this.

The chart above shows a new real time GDP tracker developed by Bloomberg.  That indicates (blue line) the world economy entered recession last month (duh), so the clock is ticking. Interestingly, the reading for February was only 0.1% growth, which shows my assumption things were already decelerating rapidly before covid-19 came along looks right. It’s safe to assume we get two quarters of negative growth to make the recession “official”. 

This piece is already WAY longer than initially planned.  Before touching on gold and the USD again, I want to reiterate that while I think we could see a deeper bear market I also see some hopeful signs. 

It looks like the curves for both infections and deaths are already starting to top out in Europe.  They also seem to be flattening now in New York state, the hardest hit area of the US.  And social distancing does seem to be working in several other countries, notably Canada.

One hopeful sign—and this is 100% supposition on my part—is that I think the virus has probably spread far more widely than the official numbers indicate. I’m surprised there aren’t more cases and deaths yet in Vancouver, for instance.  It’s hard for me to believe the virus didn't hit Vancouver early given how many people fly back and forth to China every week. 

Broader exposure would be very good news.  It would imply the overall death rate is much lower than the official one.  It would also imply there are already a lot of people out there with immunity due to exposure, at least to the current version of covid-19.  We’re being promised an antibody test in a matter of days.  If that comes through and its widely available and cheap, we could undertake mass testing for immunity. 

If it turns out 20-30% of the population is now immune to covid-19, it would be a HUGE boost to the prospects of a quick return to normality.  High risk groups will still need to exercise extreme caution, but if a big chunk of the population can go back to their normal lives, we could still get that quick bounce back that seems so improbable now.

As bad as this experience is for all of us, I’m very confident we’ll come through it.  Not unscathed, no, but better prepared for the next one.  Never underestimate humanity’s ability to solve problems, even very big ones, when we bring enough focus and resources to bear on them.

With that said, I want to close this off with some further comments on metals markets and the USD.  I’m not going to spend any time on base metals this issue.  We all know that China is the 800-pound gorilla when it comes to base metal demand. 

Many base metal (and gold) mines are seeing closures due to covid-19.  That should help keep warehouse stocks from exploding on the base metal front even with demand destruction near term.  We need to see how fast China comes back, and if part of their recipe to do it is a big infrastructure spend as it has been before.  Likewise, if the US comes through with a huge infrastructure plan to provide new jobs it would do wonders for base metals.  The US certainly needs the infrastructure upgrade.  Failing that, it will be a few months, at least, before we see much upward movement in base metals prices.

Gold is going higher.  How much higher depends on how many of its attributes come into play.  It’s already getting bought as a hedge against uncertainty of all types.  Pretty sure that will continue.  It’s proving itself, as it has many times before, as a store of value.  Gold may also see additional buying as a straight up currency in its own right and, later, as an inflation hedge.  Some of the comments in this issue are expansions or updates to my much longer thesis on gold that appears in Issue 314 (see to review that).

First up, lets look at gold as a currency and its relationship to the USD.  The one-year USD index chart above has gotten dramatic.  Like just about everything else, the USD is experiencing some of the biggest swings in recent memory. 

The US dropped initially as the Fed cut rates and the covid-19 situation rapidly worsened in the US.  When equities really fell off a cliff through mid-March, the USD exploded higher, ripping 10% in a couple of weeks.  It fell again after the Fed announced, “QE Infinity” and Washington started talking about a big fiscal stimulus package.  It’s risen again in recent sessions as Wall St rallied and traders expect the US to come out of the crisis in better shape than others.

There is a large contingent of uber-bulls when it comes to the USD lately.  There is a shortage of Dollars for offshore entities that are trying to deleverage and pay off USD denominated liabilities, and lots of others choosing to hide out in the US Dollar and wait for things to blow over.  I partially agree with those arguments, but only partially.  Against that demand we must include the massive money supply growth that QE Infinity will entail and the equally massive growth in US government deficits that’s coming. 

I think its by no means a given that the US will have smaller deficits as a percentage of GDP than other major currency blocks, or at least not meaningfully smaller.  It will be a miracle of the US federal deficit comes in under $3-4 trillion this year.

On top of that, we’ve got the Fed now actively trying to keep a lid on the USD. It’s well aware of the Dollar shortage issue.  The Fed has reinstituted multiple swap lines with other central banks, allowing them to swap home currency for USD that can be sold into the market.  More recently it set up a facility that allows central banks with US Treasuries on deposit with the Fed to use those as collateral to borrow dollars.

This isn’t pure altruism by the Fed. As I noted in Issue 314, offshore central banks tend to sell Treasuries when the USD gets too high. The chart above shows they did just that last month.  March saw the biggest drop in foreign official holdings of US Treasuries on record.  Obviously, the Fed doesn't’ want that happening while it is trying to keep US yields to a minimum.  Keeping the USD down helps everyone and forestalls selling of US assets to raise dollars by offshore entities.  And they have lots to sell. I think USD uber-bulls discount the fact the US is a debtor nation now, not a creditor, too much.

A good graphic representation of what I think is happening now is presented below.  I talked about this in “Gold’s Big Picture”.  The Bank of America bar chart shows annual coupon (Treasury bill/bond) demand and supply each year.  BoA estimates essentially all the $1.6 trillion in new notes (which I think is a low estimate) will be bought by the US Federal Reserve in 2020.

The Fed buying all the notes the Treasury department is printing is deficit monetization, pure and simple. I’m not judging. I don’t see any other way to handle this. There isn’t enough private or offshore demand to buy the sheer volume of new debt being created.

Does this monetary expansion guarantee inflation?  Certainly not right away.  The virus lockdown is an immense demand shock.  Even with supply chain issues that come soon after, I don’t see enough near-term demand to generate inflation. This will be deflationary in the near term for sure.

Longer term?  I’d say the monetary expansion this time is more likely to be inflationary than the 2008-09 version was. That was a bank/crony bailout. There’s lots of that this time too, but there’s much more going directly into the hands of consumers. And it sounds like the next stimulus package will be largely aimed at consumers and small businesses too.

Money that goes directly where its likely to be spent is far more likely increase monetary velocity than the GFC bailouts did.  Indeed, the decrease in monetary velocity after the GFC is widely viewed as explaining why those bailouts had no inflationary impact.  If $2-3 trillion finds its way into the economy quickly via consumer spending, it’s much more likely to generate some inflation a year or so out.

Generating some inflation going forward, if central banks can, will provide what I believe will be the endgame for dealing with the debt now being created.

After WWII, the Fed moved to “yield capping”, undertaking open market operations to keep yields from exceeding a certain level. At the same time, they made no attempt to subdue the (mild) inflation that followed the return of troops after the war.  This combination allowed the Fed to engineer a “soft default” where debts built up during the war were repaid with dollars depreciated by inflation.

To me, this seems like the only politically feasible way to deal with the growing mountain of debt.  The Fed tries to engineer, or at least turns a blind eye to, inflation while capping yields to ensure a significant negative real yield.  It’s the inflation creation that’s important but negative yields for an extended period—probably years—would be an additional outcome.  As you already know, negative real yields are the most supportive environment for precious metals and commodities in general.

I don’t know how successful the Fed and other central bankers will be when it comes to generating inflation.  Certainly, they failed completely at that task during the past few years.  The difference coming out of covid-19 are the large amounts of direct money transfers to persons and broad changes to international supply chains. 

The last 30 years were the age of globalization.  Based on widespread anger about job losses, and difficulties getting medical equipment and supplies, it feels like corporate offshoring of jobs and production may be coming to an end.  Offshoring was undertaken as a cost cutting measure.  It seems logical that reversing the trend will have the opposite effect, raising prices for a wide variety of goods.  Whether that’s enough to boost a more general reading like CPI remains to be seen.

In sum, I think we could still see lower lows on Wall St due to longer term job losses and earnings implosions. If that happens, it will be a slow grind, not a second crash, and the lower low may not be that far below March’s.  Its hard to tell because we’ve never witnesses either the scale of economic slowdown or the scale of fiscal/monetary stimulus currently being attempted. Wall St’s thrilled about the bailouts.  Maybe that keeps from seeing a lower low, even though I think we should, based on macro readings.

For the gold sector, it’s a different story.  We’re in the best gold environment I could imagine.  It will take time from the sector to draw in money and for that money to move down the food chain to small companies.  But I’m confident its coming.  Hang on and stay safe.  The market we’ve been hoping for is on its way.

One other thing I want to mention is that I think there are things we can all do that will help us come out of this faster.  I laid out some of this in a recent Alert but wanted to mention it here too.  I don’t know your personal situation, but I assume at least some of you have enough disposable income to undertake some of these things.

I’m high risk enough that I’m keeping my distance from everyone.  That includes people who help out around the house like the lady who comes in to clean and the crew that works on the yard.  I don’t want to be the reason any of them are in contact with more people than they have to be. For that reason, I’m paying them a month ahead and telling them not to show up.

I’m also getting more delivery from local restaurants I like than I normally do.  That’s only partially laziness. I want to support them while many are only open for take out/delivery service.  A couple of restaurants that don’t deliver I’ve bought gift cards from, that I’ll pick up when this is over.  Doing that provides them with a bit of extra cash flow now.

Last but not least, when my son does a grocery run, he makes sure to either add a food bank donation or to pick up a few cases of non-perishables and add them to the food bank box every grocery store has.   All of these are small things, but they help the small local business I like, service providers I depend on and those less fortunate get through this.   We’re all in this together. At times like this its important to remember that and act on it.  Let’s make sure there’s a bull market in kindness at least.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.