The news took many market pundits by surprise this week.
Why the sudden surge in sales of American Eagle coins in May? It was the biggest May since 2015, in fact.
Just released U.S. Mint data shows gold coin sales jumped 433%. That’s a staggering pop: from 4,500 ounces in April to 24,000 ounces in May. It’s also 55% higher than May 2017 coin sales!
A rush to safety is beginning… not only for individual investors but also for the biggest players in the market.
Here’s what’s going on:
Inflation is Back: 20%+ Returns for Gold?
Higher inflation has historically driven gold prices up as well. Famed investor Frank Holmes believes investors inevitably return to safe-haven assets like gold when they want to beat the inflation blues.
In the years when inflation was 3% or higher, annual gold returns were 15% on average, according to the World Gold Council (WGC).
Leuthold chief investment strategist Jim Paulsen says today’s rising inflation and future uptrending gold prices are closely connected.
“Since the economy has returned to full employment, at a minimum, inflation fears appear likely to persist until the next recession. 20%+ returns [for gold] represent a reasonable forecast,” Paulsen wrote this week.
Paulsen cites the Citibank U.S. Inflation Surpise Index as a key indicator to watch for potential gains in gold. “Whenever the Inflation Surprise Index has been above zero (meaning inflation reports have been outpacing investor expectations), the price of gold has produced an average annualized return of 15.5%!”
Paulsen says that gold has been in a “sweet spot” since the beginning of 2018. “Inflation pressures have been slowly building… inflation has reached a point which should prove much more beneficial to the yellow metal.”
Geopolitical Scares: North Korea
North Korea continues to dominate headlines every day, generating both great hope and incredible uncertainty for the markets.
The world hopes for a positive outcome, but there are so many variables. The unpredictability of this embattled dictatorship combined with our own administration’s aggressive negotiation tactics is clearly a highly combustible situation.
On again, off again… any development here could send shock waves into our stock markets – and your IRA retirement funds — at any time. History is being made in front of our eyes, but investors don’t want it to be at their expense.
The Dollar Dilemma: An Inevitable Slide
Despite the dollar’s recent resilient performance, analysts think its long term trajectory is far less rosy.
Mark Yusko, CEO of Morgan Creek Capital Management, says “the purchasing power of the currency is being destroyed right before your eyes, and [no one is] paying attention.”
Nicholas Frappell, global general manager at ABC Investments of Sydney, says “conditions for the gold market look more positive as the dollar rally becomes more stale and fiscal factors start to erode the dollar’s strength.”
The list of “fiscal factors” is long: competition from the Chinese yuan, surging inflation, flash point trade war issues, out of control government debt, and much more. Experts say the markets have already moved in advance of any expected rate hikes ahead.
“A steadily deteriorating trade situation is arguably bearish for the dollar (and bullish for gold),” says Edward Meir, FCStone analyst.
The dollar has an uphill battle in the years ahead, to be sure.
FOUR LEGENDARY INVESTORS SPEAK OUT FOR GOLD
Don’t just take our word for it.
Here are four major investors that believe the safe havens of gold and silver are worth considering for your IRA, especially in today’s uncertain world.
Mark Yusko, CIO/CEO of Morgan Creek Capital Management: According to Yusko, the Fed is like a dictator that has robbed our nation. Aggressive “quantitative easing” injected $20 trillion into the U.S. economy since 2008, but has done little except devalue the dollar.
Key quote: “Gold is money… it’s real money.”
Jeff Gundlach, CEO of Doubline Capital: According to Gundlach, his technical forecast shows a gold break out could be just ahead.
Key quote: “We see a massive base building in gold.”
Louis Gave, CEO of Gevekal Research: According to Gave, we’re in the middle of a one-in-a-generation shift to an inflationary boom.
Key quote: “I think the time indeed has come for having gold in your portfolios.”
Grant Williams, Financial Author: According to Williams, all the trends are pointing to rising inflation and a possible selloff for stocks.
Key quote: “Gold performs best in a rising inflationary environment… we’re moving into that sweet spot.”
GET SMART AND GET PREPARED TODAY IN YOUR IRA
I get asked these questions a lot: “Why buy gold in my IRA?” and “Why buy gold now?”
I’ll give you two evergreen reasons:
1. To safeguard yourself against the overvalued stock market of today
2. To ride out the inevitable bumps in the stock market for the years to come
But the appeal isn’t just a message of safety.
Bart Melek, global head of commodity strategy at TD Securities in Toronto, says $1,400/oz gold could be ahead in 2019: a level not seen since 2013.
Why? An equity market valued at top dollar, for one. He also cites geopolitical risks and a downward spiral in mine supply that will drive increasing support for higher gold prices.
So, consider all the reasons above, and look out the window at the way the wind is blowing against our sky-high stock market.
If you don’t have gold or silver in your IRA already, why not?
Let us help you take that first step.