After rallying on Friday, stocks tanked on Monday, dropping over 450 points. In fact, it was the worst first day of the second quarter since the Great Depression.
Most analysts blamed the plunge on the escalating trade war, but Peter Schiff has a different take. He said it was just another bad day in a bear market. In fact, he said the market could have rallied because the Chinese response wasn’t as bad as it could have been. But when you’re in a bear market, all news is bad news.
The trade war is heating up. Could it jump-start a breakout in gold?
Some analysts think so.
China fired a salvo in what could become a full-blown trade war on Monday. The Asian nation slapped tariffs of up to 25% on 128 US products including frozen pork, wine and steel pipes in retaliation for US tariffs levied on Chinese steel and aluminum.
Stock markets rallied to close out March and ended up in the black for the holiday-shortened week, but markets were down on the month and also for Q1 2018. In fact, it was the first quarter in the red for stock markets in 10 quarters.
During his most recent podcast, Peter Schiff said he thinks this was just the first of many down quarters to come, reiterating a theme he hit on last week.
Remember, the market action that I’ve been observing really, to me, looks like a bear market.”
Indians are hoarding their gold despite an increase in the price during the first quarter of 2018. Analysts say they are holding onto their gold in anticipation of bigger price increases.
Gold was up around 1.5% in dollar terms in the first quarter of this year. According to the Economic Times of India, the yellow metal appreciated 4.41% in rupees.
Even with that healthy increase, old gold sales in India fell by 35-40% in Q1 2018 compared to the previous quarter. According to the paper, analysts and traders think Indians are holding back selling in anticipation of further price increases, especially if the US and China get into a full-blown trade war.
Over the last several weeks, we’ve spotlighted a lot of data indicating the economy isn’t nearly as strong as the mainstream pundits keep telling us. We’ve focused on the collapsing retail sector. We’ve looked at household debt and US consumer stress. We’ve talked a lot about the US federal debt and its potential impact on the economy.
There’s another factor that indicates there may be some cracks in the global economy – the silver-gold ratio.
Stocks rebounded Monday after their precipitous fall late last week. The Dow Jones rose 669 points. Then on Tuesday, it tanked again, falling over 300 points.
In his latest podcast, Peter Schiff said the increase in stock market volatility is another sign things are different. He reiterated what he said last Friday. He thinks we are in a bear market. All of the flashing warning signs are there. It’s just that nobody can seem to see them.
Yesterday, we reported that some of the big mainstream players in the investment world, including Goldman Sachs, have suddenly gone bullish on gold. They aren’t alone. US Global Investors CEO Frank Holmes said he thinks the yellow metal might hit $1,500 per ounce this year.
Even with the headwinds caused by Federal Reserve monetary tightening, gold has had a pretty good start to 2018. It’s up close to 3% on the year. In fact, gold is one of the best-performing assets so far this year. As of March 23, gold had outperformed the dollar index, the S&P 500, US Treasuries and the Bloomberg Commodity Index.
Twitter has announced a ban on cryptocurrency ads.
The social media company’s announcement is more bad news in what has turned into several bad months for cryptocurrencies.
In his most recent podcast, Peter Schiff said gold could explode at any minute. Maybe the mainstream was listening because some big players, including Goldman Sachs, have suddenly turned bullish on gold.
Commodity analysts at Goldman say they expect gold to “outperform” in the coming months due to an uptick in inflation and “increased risk” of a stock market correction. According to a CNBC report, it’s the first time in more than five years Goldman’s commodity analysts have been bullish on the yellow metal.
Last Thursday, the Dow Jones fell 724 points. It followed up with a 424 point decline on Friday. Meanwhile, the Nasdaq fell 2.43% Friday.
Most analysts blamed the plunge on fear of an all-out trade war between the US and China. But the Federal Reserve rate hike on Wednesday also likely played a part in the stock market decline. The markets don’t like the prospect of having their easy-money punch bowl taken away.
So, could we be on the verge of a gold breakout as stocks break down?
