Let me be clear upfront. I don’t think coronavirus is “just the flu.” I think the pandemic represents a significant health threat and could potentially overwhelm the healthcare system if the spread isn’t slowed. I think social distancing is wise. But I also think the draconian measures taken by governments that have effectively shut down the economy in many places may prove more deadly in the long run than the virus itself.
As Kerry Baldwin said, the economy is life-sustaining.
Many people have likened the battle against coronavirus to a war and invoked imagery of the US fighting World War II. President Trump has even deemed himself a “wartime president.”
The president told reporters at a White House briefing that fighting the virus would require a sacrificial national effort just like it took to defeat the Axis in the Second World War.
Stock markets have been getting hammered, ostensibly because of the economic impacts of the coronavirus. Peter Schiff has been saying this isn’t really about the virus. It was the pin that pricked the bubble. If it wasn’t coronavirus, it would have been something else.
Regardless, the Fed hit the panic button last week and slashed interest rates by half a percent. Peter has described this as throwing gasoline on a fire. In other words, the central bank is exacerbating the problem.
The Coronavirus has officially reached the “pandemic” status. It’s a scary word that means the coronavirus has crossed international boundaries. So, what does this mean for the markets?
Many of SchiffGold clients hold silver patiently waiting for a drop in the silver to gold ratio. I am very much one of these patient holders of silver.
For those who aren’t familiar, the silver to gold ratio is exactly as it sounds: the price of gold stated in ounces of silver.
Today the silver to gold ratio is trading at about 87:1. In simple terms, this means it takes 87 ounces of silver to buy one ounce of gold.
Lately, palladium has exploded in price. It’s stirred up a lot of buzz, and we’ve seen significant palladium sales (both clients buying and selling) in the last few weeks. In fact, there has been more interest in this metal than we have seen in the 10 years of SchiffGold’s history. However not too many people know much about palladium or its history.
Palladium, platinum, rhodium, ruthenium, iridium, and osmium form what is commonly called the Platinum Group Metals (PGMs). Palladium is one of the rarest metals on Earth found in 0.015 ppm (parts per million).
Platinum has caught the eye of customers lately given how relatively inexpensive it has been trading compared to other precious metals.
Even though throughout history platinum has been cheaper per ounce than gold, platinum experienced a major spike in price from roughly 2000-2008. Since then, platinum has remained less expensive than gold, and this has caused some people to consider it a better potential speculative play versus simply buying gold.
A week ago, nearly $100 billion in short-term liquidity was added via the Federal Reserve Bank of New York offering cash in the repo market.
As a reminder, the repo market is the overnight market of repurchase agreements. This is where one sells an asset with an agreement to purchase it back at a slightly higher price the next day. In other words, very short term collateralized lending.
In 2019, gold had its best year since 2010. Peter Schiff appeared on the RT Dec. 31 and said he thinks the yellow metal should have done even better. And given the current economic conditions, he believes the 20’s will be an explosive decade for gold.
You know, the reason the US stock market went up this year is because the Fed surprised everybody by doing exactly what I had been predicting they would do. They aborted their feigned attempt to normalize their interest rates and shrink their balance sheet. They went back to rate cuts and quantitative easing. This is extremely bullish for gold.”