- On August 27, 2018
Gold dipped to $1,160 last Wednesday and then immediately shot back up to $1,175 and stayed above that support level for the rest of the week. On Monday, gold rose back above $1,190. The scare last week seemed to be triggered by gold selling in Turkey, but the main cause is a strong dollar and the momentum of a strong stock market luring investors away from gold and into a rising stock market.
As we near the end of August, we are approaching September, the worst month for stocks and the best month for gold. Beyond that, the current stock market is now in record territory – the longest bull-market ever – while gold is in a very depressed situation, similar to past market bottoms. The time to diversify is not AFTER the stock market has fallen, or gold has taken off, but before these major moves begin.
History has shown that stock market declines can happen fast. Stock market declines happen faster and sharper than stock market increases, while the opposite is true with gold: Price increases in gold are far sharper and faster than the declines in gold prices. Here are some examples of stock market dangers:
- Earlier this year, January 26 to February 8, the U.S. stock market declined over 10% in just 10 trading sessions. The Dow Jones Industrial average suffered its only two 1,000-point daily declines in one week, falling 1,175 points on February 5 and 1,033 points on February 8, 2018.
- We are now approaching the 10th anniversary of the financial crisis of 2008, triggered by the failure of Lehman Brothers on September 15, 2008. The stock market fell sharply (down 40%) in just two months, September 19 to November 20, 2008, eventually falling 55% by early 2009.
- This week, the current bull market has become the longest-ever bull market, eclipsing the bull market that ran from October 10, 1990 to March 25, 2000. The current bull market began on March 6, 2009. That doesn’t mean it will end tomorrow, but its days are historically numbered.
There is no particular hurry to exit stocks and buy gold, but the point is that you should not wait for stocks to start falling, because when the correction comes, it can come fast, leaving you with weaker bids for your stocks. Better to be a week or a month early than a day late. The same goes for gold and rare coins. When gold and rare gold coins take off, they rise rapidly. You can easily miss the first 10% of the rise. Wall Street often does! They wait for the first big move before they issue their buy signals. Smart investors act like the billionaires who are looking for the missing rare coins in their collections while prices are attractive, as they are now.
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