“While so much about the current environment remains unclear, there’s one thing that isn’t: gold, which—unlike people and our economies—is immune to the virus.”
–Goldman Sachs head of global commodities research Jeff Currie, in a note to clients.
As we near the end of the tumultuous first quarter of a new decade, nearly every investment has fallen sharply, but it appears that only gold has held its own in global markets, along with the U.S. Dollar, which just set a new high. U.S. stocks were off over 35% from their peak at one point, while crude oil has collapsed over 60% and overall commodities are off over 30% due to the abrupt global growth slowdown.
Investment December 31, 2019 March 25, 2020 Change
Gold $1,515 $1,615 +7.7%
Silver $18.04 $14.58 -19.2%
Platinum $971 $738 -24.0%
S&P 500 3,230 2,475 -23.4%
Dow Jones Industrials 28,538 21,200 -25.7%
Crude Oil $61.21 $24.31 -60.3%
Overall, the CRB commodity index is down 30.24%, year-to-date, through March 25, which makes gold’s +7.7% performance outstanding in context of most other major investments collapsing. Due to the global economic slowdown, industrial metals are also down by double-digits for the year to date (that is why silver is down so far, since the majority of its demand is for industrial usage, not for coins or bars).
The stock market reached its bottom (so far) on Monday, March 23, but it suffered its worst single point loss the previous Monday, March 16, when the Dow lost 2,997 points and the CBOE Volatility Index (VIX) hit its highest-ever level, even higher than its 2008 peak after the S&P 500 fell 40% in two months.
It’s not too late to get on board with gold, since stocks will remain volatile as long as (1) the coronavirus keeps expanding around the world, slowing economic growth and spreading panic; (2) the political infighting grows during this controversial election year; (3) Saudi Arabia wages a deflationary price war on the global price of oil; (4) global central banks push interest rates further below zero; and (5) the world’s nearly-forgotten “hot spots” take advantage of this global unrest to expand their power.
Gold has been a proven crisis hedge in times like these. In this crisis environment, gold has once again established itself to be the only safe investment for most investors and I believe gold will continue to trend higher!
Dr. Mike Fuljenz
America’s Gold Expert ™
Numismatic Consultant to First Fidelity Reserve