CHINA VIRUS - Virus Panic Causes Worldwide Gold-Buying Panic
March 23, 2020
We are living in an era of unprecedented emergency measures. Governments globally are committed to doing whatever it takes to protect their economies during this time. Of course, the world does not actually have ANY money to fight this and governments will merely create it. So far, Congress has committed almost $2 Trillion in direct aid to Americans. This is in addition to $4 Trillion in handouts to big businesses. They're calling them "loans," but there is very little doubt that they will eventually be forgiven. DC is talking about the "next step" that will "loan" small businesses (with 500 or fewer employees) 250% of their monthly expenses for two months. They're being more upfront about this, stating that the loans will become grants if the money is spent on such things as salaries and rent. I predict that the various programs and bills that are in process right now will end with $1 TRILLION per month being added to the National Debt. The amount of money that will be created will be so astronomical that severe inflation is inevitable, causing Gold to skyrocket, as it always does when severe inflation rears its ugly head. Over time, the well-intentioned "fixes" for the economy will damage the economy and add even more to the National Debt than Obama did.
For over a year and a half, in these emails, on my nationwide radio shows, on our weekly Webinars, and in my articles that are read by hundreds of thousands every week, I have been warning of an inevitable crash of the stock market. I speak to millionaire investors every week who have been quietly pulling money out of stocks and buying Gold - always a sign of an impending crash. The fact that the stock market is greatly overvalued by any measure is another sign. There is also the fact that WHENEVER the market reaches all-time highs it always has to correct itself. The stock market has always been a roller-coaster; have you ever seen a roller coaster that just keeps going up? The extreme volatility of the last year and a half is yet another sign. Huge drops in one day that take many days to recover. The fact that 2018 would have been the worst year since 2008 if we hadn't had a "Santa Claus" rally that barely averted that disaster. The stock markets always signal weakness in advance. That means they are ready to drop, and investors are just waiting for an excuse, or a "trigger" to start the crash. It could have been anything - a terrorist attack, a tsunami, anything big - and we would have seen the market crash. This time it had TWO triggers.
One is getting all the attention from the public because it directly impacts us - the Virus that China has unleashed on the world. But professional investors are just as worried about the price war between Russia and Saudi Arabia that is pushing oil towards $20 per barrel. Some might think that is good because it lowers the cost of gasoline. But don't forget that for decades weak presidents have bowed down to the liberal environmentalists who have forced us to be dependent on other enemies - Islamic nations who hate us - for our oil. President Trump has allowed our nation to finally tap its own rich reserves of oil and become energy independent within just a few years. But our main producers - the shale drillers - need oil to be at a normal $70 to stay in business. Russia and Iran have threatened that by engaging in economic warfare to destabilize our economy. That has also weakened our markets. All of these things have been warnings to get out of stocks and protect your family by placing assets in the safest possible hard asset - Gold.
If you didn't heed those warnings, a few weeks ago you received another, very dramatic, warning. Evidence that the China Virus was spreading throughout the world caused major mini-crashes. The Dow had many days with record drops. The NASDAQ had its worst day - EVER! Yet many people did what some always seem to do. They said, "It's just temporary. It will bounce back. The economy is strong." That's also called hiding your head in the sand. Yes, the economy is strong, but it is being crushed right now. The Secretary of the Treasury has said that this is the first time we have ever had a major economic downturn that the government deliberately caused - to protect the health of its citizens. Fortunately, President Trump was elected in 2016, so we have a lot of economic power in our tank, so to speak. This will probably allow us to bounce back fairly quickly once the storm passes. (Think of how much worse things would have been had Clinton been elected!) But never forget that the economy and the stock markets often move in opposite directions. We may see the economy rebound and stocks continue to drop, or go sideways for months or years. It has happened before.
Stock investors have valid reasons to be concerned. With stocks at over 350% above the mean, before the crash stock and mutual fund investors were paying significantly more for a unit of economic growth than at any time in the last 70 years. Most astute investors knew that stock valuations were at historical highs. Even these investors, however, probably were not unaware that the pre-crash valuations of January, when adjusted for the level of economic growth and heightened profit margins, defied comparison with any prior period since the Great Depression. The simple fact was that investors were paying over three times the average and almost twice as much as the prior peak for a dollar of economic growth. That's why the most astute have been exiting stocks and buying Gold for well over a year. That is what has caused the rise in Gold from $1,200 to close to $1,700 in 18 months.
The most pressing warning has been the fact that Gold has steadily risen over all these months as stocks have weakened. That is due to the fact almost all experienced investors have Gold in their portfolios of investments, and they have been increasing their Gold holdings. Some of the wealthiest people I know have only hard assets like Gold and real estate investments in their portfolios, because - unlike paper investments - hard assets increase in real value (purchasing power) as inflation rises. This has been true for over 6,000 years of recorded history. But many failed to heed even this vital third warning. And so they are scrambling to buy Gold.
This has caused the panic buying of Gold that we are seeing all over the world. I have been in touch with dealers worldwide who tell me that they have long lines of people waiting to get into their stores - sometimes lines around the block. Some have had to have police keep order and escort large buyers to their vehicles. When they ask buyers what they want to purchase, the answer is always the same - "Whatever you have, and as much as you will sell me. Since all of my Gold business is by phone, I haven't had that problem. But my phone has not stopped ringing. People with cash in the bank are desperate to turn it into REAL money. Many express distrust in their banks and even the FDIC. Many dealers have had to limit the amount of Gold each customer can buy. So far, we have not had to do that, except with certain Gold products.
The bottom line: Take advantage of this warning. It may be the last you get. Be prepared for whatever happens. You can't go wrong buying and holding Gold. Like the hokey TV commercial says, "Gold has never gone to zero." Of course, it hasn't - it can't! Precious metals have been the only real money since their first mention in the first book of the Bible. They are the only real money in the Bible and in the Constitution. It has only been in the last hundred or so years (since the passing of the unconstitutional Federal Reserve Act of 1913, and the government's theft of US citizens' Gold in 1933) that we have been foolish enough to believe that paper backed by nothing is money. We have seen nation after nation fail when they trusted fake government "money" over the last 3,000 years. It's called hyperinflation, and it's caused by governments issuing "fiat money" that is backed only by the word of the government. We could very well be next.
A few people who don't understand how markets work have asked me if this is a good time to buy, since Gold has dropped over 10% since the very worst days of the stock market. My reply is that they will probably never have a better time to buy, especially in the face of expert predictions that Gold is on a trajectory to reach between $3,000 and $5,000 - even without a full-blown crash. If we experience runaway hyperinflation like the U.S. did in its early days, as Germany did in the last century, and like Zimbabwe did in the 2000s, we would probably see Gold increase in buying power by 10 to 20 times, and paper money being used for toilet paper like it was in Germany.
The reason Gold dropped was because of a crisis in confidence concerning liquidity. In other words, people were so frightened by stocks dropping by one-third that they were selling everything that wasn't nailed down to raise cash. In some cases this included foolishly selling their safest asset - Gold. According to Brien Lundin in MarketWatch, “We saw similar behavior during the 2008 financial crisis. However, once investors understood and appreciated the scope of central bank stimulus coming down the pike, they began buying gold. The price more than doubled from the lows thereafter.” Others saw the danger in stocks early, bought Gold, and locked in huge short-term profits when they sold the Gold in the price jump. Regardless of the reason, this is a huge - but very temporary - buying opportunity to buy Gold at prices we will probably never see again.
I have spoken on this subject in economic conventions, church conferences, and in many of the International Money Shows over the last 30+ years. People say, "A financial crash could never happen in America." When I ask "Why?" they say, "Well, this is America." I have news for people that have that much faith in a government that is unable to control its own spending. Hyperinflation has happened in Germany - twice. It has happened in France - four times. And it has happened in almost every other nation at some time in history. We have had hyperinflation twice in the U.S. That should not be a surprise since the U.S. has more debt than any nation that has ever existed.
A few final thoughts, as I write this on Sunday evening:
* Stock futures are down 5%, the most allowed, indicating a very rocky opening tomorrow, and perhaps a halt in trading if this gets really bad. A halt in trading is a serious (but sometimes necessary) step. We have seen such halts several time in that past few weeks.
* Gold futures are up, indicating that the people who bought Gold last week will be very thankful tomorrow. But that doesn't mean it's too late to get in.
* One US Senator and two Represenatives have tested positive for the Coronavirus; five Senators and an unknown number of Representatives are quarantined. This strikes fear in the hearts of investors. If the situation devolves and Congress cannot meet, who will spend all our money? (Seriously, I am sure Congress will be forced to change some rules to allow Senators to vote remotely. But it's still scary for investors.)
* Oil futures are open now - down 8%.
* About 1/3 of American citizens are basically on house arrest, having been ordered by their governors to stay at home.
* The Royal Canadian Mint has shut down for at least two weeks supposedly for safety reasons. Another likely (but unspoken) reason is a deliberate attempt to reduce the Gold supply. Governments do not like Gold, as it is the only financial instrument you can use privately (except for many bullion purchases, which must be reported to the US Government). Check with me to find which bullion products are exempt. The Canadian Mint closure is likely to extend much longer, since governments don't consider minting Gold an "essential industry." ("WE do you dummies!") The US, British, Australian and other mints are likely to follow suit.
There is so much more that you need to know in order to protect your family. I have spent hundreds of hours putting together a comprehensive "Gold Education Package" of well-researched articles and videos. If you would like a free copy, call me personally at my direct line below. You won't get a sales pitch - you'll receive educational materials that could very well make a huge difference for your and your family's financial futures.
A few advance tips; when you buy Gold don't fall into these traps:
1) Buying Gold online, especially in this environment. You don't know what you're getting or with whom you are dealing. You could lose all your money, as millions did with Bullion Direct - the biggest and "Most Trusted" online bullion dealer a few years ago.
2) Buying Gold stocks. There are many types of Gold stocks. Some track Gold to an extent, but none do so reliably. Some frequently move counter to Gold. Get the real thing.
2) Buying Gold certificates, or any kind of situation where someone else holds your Gold. When you need it the most, you likely won't be able to access it. "If you can't hold it, you don't own it."
4) Buying new or used jewelry, scrap Gold, dental Gold, etc. Unless you're an expert and have testing equipment, it may not be Gold at all. If it is, you have no way of knowing its purity.
5) Buying the wrong kind of Gold. This is where the Gold Education package comes in. Some types of Gold get 7 to 8 times the return of the kind most people without this knowledge buy.
Dr. Tom Barrett
MONDAY MORNING UPDATE:
1) Stocks did open down - and then dropped further. The Dow opened down 300 points, and lost another 200 in the following 10 minutes.
2) Gold opened strong. It is now $50/ounce higher than Friday's clos.
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He has written thousands of articles that have been republished in national newspapers and on hundreds of websites, and is a frequent guest on radio and television shows. His weekly Conservative Truth article (which is read by 250,000) offers a unique viewpoint on social, moral and political issues from a Biblical worldview. This has resulted in invitations to speak internationally at churches, conferences, Money Shows, universities, and on TV (including the 700 Club).
“Dr. Tom,” as his readers and followers affectionately refer to him, has a passion for teaching, as you can see from his ministry website (www.ChristianFinancialConcepts.com); his patriotic site (www.ConservativeTruth.org); and his business site (www.GoldenArtTreasures.com). Tom's friend Dr. Lance Wallnau wrote of him, "Tom Barrett is a Renaissance man with a passion for subject matter ranging from finance to theology and American history."
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