I recently posted this short video on gold to my YouTube Channel, giving 5 quick reasons why you should consider buying gold right now. Please look forward to an additional full-length series on gold and silver which will be coming soon, both here and on YouTube.
Reason #1: Inflation
The economic fallout from the Covid-19 lock-downs has resulted in an unprecedented amount of money printing by the Federal Reserve. This includes stimulus payments that are making their way into the real economy. As a result, there is a significant chance of runaway inflation. Gold has proven itself in the past to be an excellent hedge against inflation.
Reason #2: Stock Market Weakness
Contrary to popular opinion, the stock market does not perform well during periods of inflation and rising interest rates. For example, the recent rise in bond yields is already causing trouble in the stock market. This has especially been seen in overvalued growth stocks. Gold (and silver) has proven itself to be an effective hedge during stock market crashes and bear markets.
Also see my recent article, How to Protect Your Investments from a Stock Market Crash.
Reason #3: Money Printer go BRRR
Refer back to reason #1, Money Printer go BRRR.
Reason #4: Technical Support
Gold has been in a bullish consolidation since August of 2020. It has recently bounced off of a confluence of technical support, including a significant Fibonacci retracement. While it may continue to see weakness in the short term, the groundwork has been laid for the next leg higher in this precious metals bull market.
Reason #5: Bearish Sentiment
We are starting to see a lot of bearish sentiment on gold, which is a great contrarian buy indicator. Many have given up on gold and turned to Bitcoin as the “new gold.” They are calling gold “boomer rocks”. After gold was called a “pet rock” in this infamous Wall Street Journal article, it proceeded to gain about 30% within the next year.
As a contrarian value investor (which I consider myself to be), you want to be buying what everyone else hates. This goes back to Warren Buffet’s famous saying, “Be greedy when others are fearful, and fearful when others are greedy.”