Gold - A Simple Insurance Policy

If you missed the Top 10 Takeaways from The March Jobs Report, here is a LINK.

Six months ago, I wrote that Gold is on the precipice of a period of Powerful Outperformance LINK.

Remember, GOLD is insurance.

After moving sideways for more than a decade, Gold is surging.

Here are 5 reasons why forward-thinking Investors should STILL consider GOLD.

1) Right now, the US economy is growing faster than expected.

ISM manufacturing index is growing.  New orders are a leading indicator for production, and rising new orders suggest industrial activity should continue its growth for some time LINK. The consumer is stable.

The US GPD is growing at 2.5%+. 

2) Inflation Expectations Are Rising.

Inflation usually follows growth.  After falling for over a year, the 5-year breakeven inflation (a long-term inflation gauge) is rising again.

Gold is a store of value.  Gold outperforms in inflationary periods.

3) Geopolitical risks are rising.

The U.S. is now supporting two wars on foreign soil.  Oil-producing countries are on the other side.  China is also on the wrong end. Over the past year, geopolitical risks are rising.

Are peace times coming to an end?

Gold is the only proven INSURANCE against rising geopolitical risk.

4) Is The US losing control of its finances?

The current 6% deficit is the highest in a non-recessionary period.  Likely, deficit spending will only increase in an election year. As a result, the Treasury will sell more bonds at high rates to support deficit spending.  A rising deficit will ultimately lead to Dollar weakness.  While Dollar weakness may not be imminent, it is inevitable.

Gold is the only proven instrument to protect the spending power of citizens.

5) Banks are still under duress.

Consumers are gradually moving their savings out of the banking system into higher-yielding alternatives.  Higher rates are reducing loan demand.  Long-duration investments on bank balance sheets are underwater.   The eventual economic slowdown will pressure Office and commercial real estate investments even more. Banks are weak.

Gold is the only Asset with no counterparty liability! 

Strong US growth will not last forever.

Eventually, the current low-cost debt will have to be refinanced at higher rates. This will raise the cost of capital and cause a slowdown. Forward-looking investors buy uncorrelated assets in anticipation of tough times.

Gold outperforms most asset classes in a recession. 

Gold is INSURANCE.

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