The recent stock market gyrations may have induced vertigo, if not nausea. Radical
US Person suggests: gold. Why? Look at these charts courtesy of Marketoracle.co.uk
The shaded area are financial crises, the last two being the dotcom meltdown and the Great Recession of 2008 Obviously gold is considered to be a good investment when the stock market is tanking. The next crises, call it the debt crisis, is coming. The recent shock to the markets was triggered by the pandemic, but is more a symptom of the weakness of the global economy fueled by massive amounts of debt, both public and private. So which would you rather hold during a financial crises, cash or gold? The answer provided by the next charts is: gold.
With the rise in global economic insecurity, investors are flocking to gold as the strong correlation between an insecurity index and gold flows shows in the left hand chart. The fact that investors are choosing gold bullion instead of gold based securities is shown in the right hand chart. Even central banks are making massive gold bullion purchases, and they usually know more than Joe Blow. The reason for their preference is clear:
Since the turn of the 20th century the dollar has witnessed a massive decline in purchasing power indicated by the green line. Since Tricky D took the US off the gold standard of $35 an ounce the value of gold increase
fifty times.
