I know I have some damn nerve telling you this. I mean, who the fuck am I? I’ve lost money over the last 30 years during the biggest bull market in the history of man. But still, I’m demented enough to think that I’m right. Not only do I think I’m right, I have the audacity to want you to believe me and actually do what I’m telling you to do with your precious, hard-earned money.
Okay, here are my deranged thoughts. I’m going to give you six reasons why I want you to buy gold and sell your stocks today. Most of the reasons are connected to Trump and his policies. I don’t want to blame it all on Trump because the carnage that I predict is going to happen is because of all the bad policies and actions of the last 20 years. Therefore, all of his missteps will be amplified many times over.
- Unprecedented debt: the world is awash in it. This includes government, corporate, and personal debt, which are all at record highs.
- Rising interest rates: this is very much connected to number one. The ten year bond has risen from 1.3% to 2.6% in a couple months. This is a huge move, which I believe only portends much higher rates in the future.
- The stock market will go down. The market is crazily overvalued, especially because the underpinning of low interest rates is being yanked away.
- Trump’s policies: he is not only planning to cut taxes, but he’s also planning to spend one trillion dollars on infrastructure. This will completely balloon the deficit, which is now standing at 20 trillion dollars.
- Protectionism: Trump wants to impose huge tariffs on imports. This will greatly increase the cost of everything to consumers. China will definitely retaliate. The free flow of goods will be severely diminished, thereby stifling worldwide, economic activity.
- Geopolitical risk: again Trump and his big mouth. Provocative Tweets, especially against China, may escalate the tensions into something very serious like a war. Also, his support of Putin may encourage Putin to do something against our allies of western Europe, prompting the US to get involved.
So why gold? Because gold shines when shit flies. If the stock market is going to fall; if there’s going to be a war; if America will have difficulty paying interest on its debts; if Trump starts imposing trade tariffs. People will panic and they will turn to one of the few, solid, tangible assets. Gold. And gold is really cheap now, which is ironic. It’s been going down ever since Trump got elected. People are so confident that Trump’s policies will cause an economic boom that they’re buying stocks and dumping gold. This is exactly why I’m telling you to do the opposite.
Buy the ETF that is backed by physical gold. Ticker symbol GLD. Or for more bang for your buck, buy the gold miners. Ticker symbol GDX.
I may be right, I may be wrong. Who the hell knows? But think of it as insurance. If I’m wrong, gold won’t go down that much from here. But if I’m right and disaster happens, selling some of your stocks now and having 5% in gold can provide some protection against financial turmoil.