Why Gold Will Finally Shine As We Enter Market Down Leg

Despite its reputation, gold hasn’t really been the safe haven when things have gotten really ugly in the past.

In 2008, before starting a three-year bull run, gold dropped 30% in the panic sell-off.

In March 2020, when Coronavirus emerged and the markets tanked, gold fell 15% and gold stocks were hammered as investors scrambled to liquidate assets – including gold.

Both of those times — when financial systems were stretched and investors most panicked — gold wasn’t a true safe haven at all.

In fact, the best way to play gold in both times was not to buy in before the crisis at all.

But this time around it’s looking like the time to buy is actually before the next phase of the markets begins, because gold may not dip big like it did before its runs in 2008 or 2020.

Here’s why.

Worse Than a Market Crash

First, we’ve got to understand where the next phase of the market is most likely to take us.

All indications are we’re in the late stages of a mania market.

Inflation is low. Money is free. Investors’ risk appetite is high.

It’s been a heck of a party, but it won’t last forever.

When it ends, the next phase will begin.

And the market’s next phase will be something far more destructive and costly to the average retail investor than a sharp market crash and equally sharp rebound like we saw in 2008 or 2020.

The next phase will likely be a long and sustained revaluation of all assets, which will appear to be a bear market for many of the hottest stocks and assets today.

It will also be prime time for two assets — gold is one of them — to really shine.

But the key will be getting in soon, because the next market phase is already starting, and there won’t likely be a pre-run crash like in 2008 and 2020 to buy in even cheaper.

Why no crash?

Simple. It’s not crazy to forecast a crash.

All the extra cash being printed is creating asset bubbles, and lots of them.

The amount of true belief in the current rally is low.

We are all just speculating in a wild ride.

The point of a peak where “house prices never go down” or similar hasn’t been reached.

Sure, there has been a lot of retail investor trading and big swings in shares of some doomed companies, but most investors don’t really believe it will last.

That’s why I believe we’re looking at a long bear market and the return of two assets which haven’t done well at all recently.

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Return Of Get Rich Slow

The two assets which have lagged in the current market are poised to bounce back big.

Just look at history.

The 2020s will likely resemble two previous decades — the 1940s and 1970s.

Those decades were marred by inflation, declining stock prices, and immense financial system strain.

For example, the 1940s saw a type of long, sloping bear market that could be coming up for us today.

The S&P 500 actually declined 18% in the 1940s.

And Inflation for the decade was 69%, which included a one year mega spike of 18% in 1946.

The 1970s mirrored the 1940s from a financial perspective.

The S&P 500 declined 33% over that decade while inflation averaged 7.25% per year.

Although both of these decades were generally down for the markets, two asset classes stood out as top-performers — gold and dividend-paying stocks.

Conditions are right for them again.

HFT and algos aren’t the only ways Big Tech hurts retail investors

Many online brokers charge a fee to market makers for taking the other side of a trade.

In exchange, the market makers get a peek at those orders a few milliseconds before they’re filled.

In other words, they get to see the order flow ahead of retail investors.

Result – they can front-run the market and pocket the spread… at your expense.

Good Bets In Bad Markets

Gold and dividend-paying stocks are most sought after during less than ideal market conditions.

They’re even more in demand in an inflationary economy, as both provide protection of capital in a time when inflation is eating away at peoples’ savings.

And since the 2020 crash, both gold and dividend paying stocks have been lagging behind the overall market frenzy.

Just look at what has been going on with the best dividend paying stocks to own over the long run, Dividend Aristocrats.

The Dividend Aristocrats is an index made up of companies that have increased their dividend every year for at least 25 years.

These are the best examples of best-in-class dividend stocks in the world and, since they have proven to be able to steadily increase dividend payments, they are ideal for times of inflation and other economic turmoil.

As a group, Dividend Aristocrats tend to do best under certain market conditions.

The last year has not been one of those periods.

If you go back to last February, the S&P 500 is up 17% since.

The Dividend Aristocrats is up less than half that at 8% over the same time period.

That’s a big gap in underperformance and signals the Dividend Aristocrats will fare better in a bear market, but their performance is off the charts compared to gold.

Gold has not exactly outperformed in this market, but given what’s coming, gold should be shining.

The amount of money supply expansion to fuel the current asset bubble should make gold a leader, the way it was back in the middle of 2020.

Gold, however, had a rough close to 2020 and has been the worst investment class of 2021 so far.

The top 15 worst-performing ETFs are all gold and gold mining stock ETFs.

The numbers are bad, and they’re creating an explosive combination.

Gold prices have held up relatively well. The price is about $300 higher per ounce than it was last February, before the March meltdown hit.

Gold stocks, however, are almost lower than they were when the price of gold was over 15% cheaper than now.

Everything is in place for a sharp turnaround in these assets which have lagged during the market rebound.

Why Gold Is “On The List” For The Next Party

Remember, that which can’t go on forever, won’t.

What we’re seeing now in much of the market cannot go on forever and it won’t either.

And when the turn comes, it will be prime time for the major asset classes which have been left behind in the current rally.

In a recovery, it will be the worse the better.

Dividend paying stocks have been a laggard.

Gold and gold stocks have been even worse.

Both will outperform when this all reverses, but gold will likely go from worst to first.

We’re not likely to see a set up like 2008 and March 2020 where there is a big dip in gold before the rip, so the time to get ready to move is now.

Dylan Berg,


Dear Retail Investors

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