Bond Market Cracks, Gold Soars

Written by Gerardo Del Real
Posted August 26, 2019

I hereby order you to buy the best gold stocks.

It’s a bizarro world out there and if you want to save yourself having to read through 500 words, I’ll summarize this piece for you by telling you to go buy your favorite gold juniors. The end.

Those of you still reading who care to know why and what’s next, it really comes down to two simple questions with two simple answers.

The first question you should ask yourself is, “do I see more or less volatility in the near future?”

Judging by the market action in the past week or two, the clear answer is more.

Friday, before the U.S. stock markets opened, China’s Ministry of Finance announced that it will apply new tariffs of between 5% and 10% on $75 billion worth of imported goods from the United States.

Trump responded saying he would raise existing duties on $250 billion in Chinese products to 30% from 25% on Oct. 1.

Additionally, he said, tariffs on another $300 billion of Chinese goods, which start to take effect on Sept. 1, will now be 15% instead of 10%.

He followed that up by saying that he could declare the escalating U.S.-China trade war as a national emergency if he wanted to and then tweeted ‘Who is our biggest enemy, Fed Chairman Powell or Chinese President Xi?'

Put politics aside. Do you really believe the stable genius will get more stable as the election cycle ramps up?

That’s not the second question I want you to ask yourself. The second question I want you to ask yourself is do you believe interest rates are going lower or higher?

Because if you believe they have nowhere to go but lower then we agree that volatility is here to stay — and likely to ramp up — which is good for gold, and we agree that interest rates will continue lower, also good for gold.

The two main factors driving gold right now are the safe-haven status that the yellow metal provides and realization that we are entering a game of bond market/currency musical chairs which can only end one way because of math.

Consider this. Germany — the strongest economy in the Eurozone — just did, or tried to do, something it has never done before. It tried selling 30-year bonds with a negative yield.

The move was praised by President Trump. Here’s what Trump didn’t mention. It was a failed auction. Maybe the worst Germany has ever had.

The politicians won’t call it that but that’s what it was.

It won’t be the last.

To your wealth,

gerardo-sig

Gerardo Del Real
Editor, Junior Mining Monthly and Junior Mining Trader.

For the past decade, Gerardo Del Real has worked behind-the-scenes providing research, due diligence and advice to large institutional players, fund managers, newsletter writers and some of the most active high net worth investors in the resource space. Now, he is bringing his extensive experience to the public through Outsider Club, Junior Mining Monthly, and Junior Mining Trader. For more about Gerardo, check out his editor page.

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