Here Comes the Rush

Written by Adam English
Posted March 31, 2020

I don't have to tell you gold is the ideal safe harbor right now.

We've been talking about it for a long time now. Now everyone else is.

This chart says it all. If last week's stock market rally felt like a chance to take a breather and relax a bit, look at where gold went after the initial freak-out and mass selling.

gold v sp500 31mar20

I don't have to tell you that the stock market was primed for this fall regardless of the cause.

We've been talking about that, too. From the Fed wasting its few tools to further boost a stock market at all-time highs to the historic rise in corporate debt at rates that mask risk.

Now everyone else is too. No good comes from saying “We told you so” but we certainly have the option.

We're seeing that in articles that mirror what we've been writing about for years popping up in former bastions of stalwart defense of the NEW new normal for the Fed.

A prime example is The Washington Post, who finally got around to publishing an article titled “The coronavirus crisis is exposing how the economy was not strong as it seemed.”

It was published three days ago. The postmortem approach is good for little more than a mea culpa.

What I do have to say is that there is a sea change — to keep the nautical thing going — not only in the markets, but in investor outlooks, that has only just begun.

It is one thing to limp into any safe port in a storm, it is another to own the docks. We are happy to be in the second group. You should be with us.

There is plenty more news that has yet to break in a major way that is bound to trickle up to the MSM soon, especially as gold prices continue to climb.

Short gold positions are getting crushed. Last week gold surged 8% and bearish U.S. gold futures on the CME's Comex were cut by about 80%.

It was the fastest cut on record, and took the total down to the lowest levels seen since September 2009, right before the masses tried to cram into gold all at once.

We just saw the largest influx into the largest gold ETF, the SPDR Gold (NYSEARCA: GLD) in 10 years. Once again, right around the last time investors fled to gold en masse and pushed prices to all-time highs.

It issued 6% more shares in just a single week to accommodate the influx.

Of course, it is a good thing it can do so on paper. Good luck even getting your hands on physical gold. Commercial flights used to fill out their freight weight capacity with gold shipments when possible.

Needless to say, there isn't much gold being moved on commercial flights now. We also have yet to feel the full effects of mine, refinery, and warehouse shutdowns to prevent the spread of the virus. That has already begun and will get much worse.

Those short positions I mentioned before? Don't forget that the counterparties to those trades can either cash out or demand delivery.

Imagine what would happen then? That gold has to come from somewhere, anywhere even, and it is going to come at a hefty premium.

Make no mistake about it, this gold bull market is just starting. We're just beginning to define the terms of how it will pan out for what looks like years to come.

Here comes the rush. Get positioned now.

Or, read about it again in The Washington Post in a couple months. The choice is yours.

Take care,

adam english sig

Adam English
Editor, Outsider Club

follow basic @AdamEnglishOC on Twitter

Adam's editorial talents and analysis drew the attention of senior editors at Outsider Club, which he joined in mid-2012. While he has acquired years of hands-on experience in the editorial room by working side by side with ex-brokers, options floor traders, and financial advisors, he is acutely aware of the challenges faced by retail investors after starting at the ground floor in the financial publishing field. For more on Adam, check out his editor's page

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