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| Money Metals News Alert | April 1, 2024 – Gold prices made another all-time high at last week's close and opened still higher today. The modest rally in silver has been less noteworthy.
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Uncertainty as to the cause and consequences surrounding the collapse of the Francis Scott Key bridge in Baltimore drove some buying in gold.
U.S. equities, meanwhile, shrugged off the possibility of terrorism and supply-chain disruptions.
The S&P 500 also claimed a new all-time high by the close of markets ahead of Good Friday.
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Demand for bullion in the retail market is picking up. While some investors view high gold prices as an opportunity to sell, the majority seem to view the price action as confirmation of a trend higher. Retail buying continues to significantly outweigh selling.
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 | Gold : Silver Ratio (as of Friday's closing prices) – 89.1 to 1 | | |
| We Should All Be Preppers Now | | | |
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The label "prepper" carries some baggage. Even after all this country has seen in recent years, some still consider those stocking up on food, ammo, bullion, and other emergency essentials as a little bit nuts.
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Despite some close brushes with disaster, including the 2008 financial crisis and the more recent supply chain disruptions associated with Covid, it somehow seems hard to believe the nation's critical systems are at risk.
Normalcy bias is a luxury people can no longer afford. Anyone operating as if the next twenty years are sure to look pretty much like the last twenty probably isn't paying attention.
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The collapse of the Francis Scott Key bridge in Baltimore is the latest warning. We are dependent on fragile, complex, interconnected systems. The nation's transportation system is only one of them. Other examples include the financial system and electric grid.
It does not require a deliberate attack to disrupt these systems. Incompetence, corruption, and negligence can yield the same result. So can random accidents.
The reason the container ship struck one of the primary bridge supports might have been any of those things. There's also the possibility it was deliberate, and that other attacks on key infrastructure may be in the offing.
Even if the incident proves to be an isolated event, its ramifications will be widespread. The loss of the critical bridge and the short-term shutdown of the Port of Baltimore are going to disrupt supply chains.
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For investors, preparation means thinking about whether you are "all-in" on conventional securities, or if you have some hedges in place. It means thinking about what true hedges are.
The phony diversification many financial advisors like to talk about probably won't cut it. An investor isn't going to be properly hedged by moving 20% of his portfolio out of consumer cyclicals and into utility stocks.
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If a critical system goes down, one of the next things to collapse could be the financial markets. Stocks, bonds, and other assets which depend on confidence can fall nearly as fast as the Francis Scott Key bridge.
Investors are wise to acquire some assets which aren't dependent on confidence, or well-functioning systems, to hold their value. This means buying non-conventional assets beyond stocks, bonds and money market funds.
Physical bullion is one of the assets to consider. Certain kinds of real estate, such as farmland, is another. Bitcoin may be worth a look, though it isn't going to hold up if the failed system turns out to include the internet.
To be clear, the paper price of precious metals can also be dragged down during a panic in the financial markets. However, it is important to understand that scarce physical bullion is different from a metals derivative, such as a futures contract.
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Confidence in cash – the Federal Reserve note dollar – isn't what it used to be.
The full faith and credit of our insolvent, and corrupt, federal government also doesn't amount to much these days. Many investors won't want to hold cash or buy Treasuries, two of the most popular and traditional safe-havens.
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Investors who are wary of rising credit risk and inflation risk are going to look at physical metal.
The early days of the Covid panic provide a pretty good model for how modern markets are likely to respond to major turmoil. Investors temporarily dumped gold and silver futures, driving paper prices down. But demand for bullion spiked and premiums surged, offsetting much of the decline in prices.
Now is not the time to follow the herd.
Stocks have been strangely impervious to bad news. It is apparently going to take an extreme event for most investors to snap awake, switch the autopilot off, and seek genuine safe havens. | | |
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| This week's Market Update was authored by Money Metals Director Clint Siegner. | | |
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| This copyrighted material may not be republished without express permission. Offer only available through email promotion. Offer does not apply to previous orders and may not be combined with any other offer or program. Special shipping rates or other restrictions may apply to international orders. The information presented here is for general educational purposes only. Money Metals Exchange and its staff do not act as personal investment advisors. Nor do we advocate the purchase or sale of any regulated security listed on any exchange for any specific individual. While our track record is excellent, investment markets have inherent risks and there can be no assurance of future profits. You are responsible for your investment decisions, and they should be made in consultation with your own advisors. By purchasing from Money Metals, you understand our company is not responsible for any losses caused by your investment decisions, nor do we have any claim to any market gains you may enjoy. Money Metals Exchange is not a regulated trading "exchange" as defined by the CFTC and the SEC. | | |
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