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Why Is Gold Beating Stocks?

Nov 14, 2023

Gold is surging, testing the $2,000 announced milestone. Over the past 30 days, prices have jumped by $175 an ounce. They're up $365 an ounce over the past year. Over the past five years, prices have risen by almost $800 an ounce. Meanwhile, what is happening in other asset classes? Stock values have fallen into bear market territory and doubts are rising whether equities will produce reliable long term returns in the future.

Tech stocks have appeared strong, but they've been propped up by a few big tech companies and hype about artificial intelligence. Bond values have taken the worst beating in decades. Remote work and online shopping have decimated commercial real estate values. Inflation adjusted home values are falling across the country, and home equity is now harder to unlock. The race for high returns has produced bubbles in many assets, and an investor mentality more appropriate to casinos than responsible financial management.

As a result, wealth destruction is happening across asset classes while gold is creating and protecting wealth. If you follow my commentary, you know that this is exactly why I recommend gold as wealth insurance, especially when geopolitical tensions and economic worries rise. Gold can offset losses in your other assets when you include it in a balanced portfolio. These days are a prime example of that dynamic.

With two years of war in Europe, the most dangerous conflict in the Middle East in 50 years, rising tension with China and Iran. The situation in the world today certainly fits that description. The US now faces an unholy alliance of China, Russia, Iran and North Korea, three nuclear armed adversaries and another, Iran, on the doorstep of entering that club.

Here at home, homeownership has become unaffordable for most American families. Rising interest rates caused a banking crisis last spring, and worries continue about that sector. Inflation remains stubbornly high despite action by the Federal Reserve to contain it. Labor management conflict is rising and more industries are facing determined strikes. The national debt is now at $33 trillion, and is expected to rise to 43 trillion in only five years.

Political conflict is paralyzing the ability of Congress to meet these challenges, none of which will resolve themselves without leadership. So what does all this mean for gold prices over the next year and longer term? Well, central banks worldwide are selling assets and buying gold to diversify their portfolios. Just like we recommend to individuals, safe haven demand is driving gold buying in the huge Asian markets that dominate the world gold market.

High interest rates have produced the strongest dollar in decades, placing a temporary cap on foreign gold demand. The dollar is expected to weaken next year, taking the cap off foreign demand, allowing prices to rise. Gold is now harder to find and more expensive demand to mine, and with a 20 year record of protecting people during hard times, there is no substitute for gold.

Americans appreciation for the value of gold has risen to the point that a discount retailer is selling it online now. That's great news because broader demand is likely to fuel rising prices. That retailer has restricted gold sales to very small quantities when they have it in stock, which often they don't, and good luck trying to sell it back to them when you want to liquidate your holdings.

U.S. Money Reserve always has gold in stock. We don't restrict the quantities you can buy, and we have a buyback guarantee for many of our products. As I've said, gold is surging, testing the $2,000 an ounce milestone. I'm convinced it will challenge or surpass the all time high of $2,075. I also believe gold will outperform most other asset classes, many of which are likely to continue to decline or remain in bear market territory.

If you've been waiting for a clear signal that it's time to buy, you have it now. I believe this rally will be sustained, so you're not too late to have wealth insurance that every portfolio needs. Act now to protect your financial security with gold.

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