Embattled President Sets Stage for Gold Rally

President Sets Stage for Gold RallyIt’s a financial truth almost as old as the hills – or at least as old as the stock market. During times of uncertainty and political turmoil, stock prices will decline.
An investment in the stock market is tantamount to an investor’s stated belief in the future at any one time. If an investor buys a stock in a company, he believes that stock will rise, particularly because the economic conditions for that company (but especially those for that company’s product or service) are favorable.
The reverse is also true. If an investor sells a stock in a company, he believes the stock will decline, and that it’s not safe for his portfolio to hold on to the stock. And so, he sells it. In other words, public confidence will invariably have a dramatic effect on stocks.
It’s also true that the price of gold will rally during difficult times. Back in 1994, a report by Martin Armstrong showed that “every major rally in gold was linked to a crisis in confidence.” We witnessed this phenomenon at work “during the Panics of 1864, 1869, 1893, 1907, 1929, 1974, 1980 and 1987” when the public came to doubt the stability and durability of the government.
It makes sense when you think about it. If the public doubts the future and the ability of the government to govern, it will pull back on its positive bets for the future – in other words, on its purchase of stocks. The public will then cling to gold, the one hard asset it feels certain will hold value.
In more recent times, the Watergate scandal of the early 1970s is a prominent example of these financial market changes. Stocks and bonds skidded downward, and gold climbed dramatically.
This morning’s market activity reinforced this historic trend when stock indexes sold off dramatically for what amounts to the biggest losses in months. The Nasdaq moved down 1.8%, the S&P 500 and Dow Jones Industrial Average shed 1.3% of its value, and the Russell 2000 dropped 2.1%. These were the biggest market losses since March 21.
According to Investor’s Business Daily and other noted publications, investment analysts think that markets are reacting to the possibility that President Trump may have obstructed justice when he requested former FBI director James Comey to ditch his investigation of Michael T. Flynn. The former national security adviser is thought to have supplied the Russians with confidential U.S. information. While it would take a two -thirds majority in the senate to unseat Trump, observers note that the President will now have a difficult time getting his tax plan and other important legislation through congress.
Meanwhile, have you looked at your own retirement account? If you have stocks that are showing profits, you may want to sell at least some of your shares. You may also want to increase the quantity of physical gold you now possess. To do so just might prove the wisest investment decision you make all year.
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