It turns out Friday’s 666-point Dow Jones plunge was just a prelude. On Monday, the Dow suffered its largest-ever drop in terms of points. It was down 1,600 at one point and ultimately lost 1,175.21 points, a 4.6% decline. According to Reuters, declines for the benchmark S&P 500 index and the Dow Jones Industrial Average were the biggest single-day percentage drops since August 2011. Monday’s crash ranks in the top-20 of all time Dow Jones drops in percentage terms.
Peter Schiff actually predicted a Monday crash in his podcast last Friday. Yesterday, he took to the microphone again, noting that even with the precipitous fall in the stock markets, the mainstream “fake financial news” remains clueless.
As the Brisbane Times puts it, “When the going gets tough, Germans Buy Aussie Gold.”
And they are doing it now.
Last fall we reported on Germany’s budding love affair with gold. It appears this is more than just a one-night fling.
Gold can serve as an important diversifier and increase returns for “buy-and-hold” investors such as pension funds, endowments, insurance companies and sovereign wealth funds.
They call it the business “cycle” for a reason. Cycles repeat.
As Peter Schiff pointed out in a recent podcast, the financial crisis was triggered by rising interest rates on the debt that had been accumulated in the years prior as a result of the Federal Reserve keeping interest rates at 1% for a year-and-a-half and then slowly raising them back up over the course of another year-and-a-half.
Friday, the Dow Jones fell more than 600 points. It was the third big drop in a week. Most analysts mention nervousness about sharply rising bond yields as one of the reasons for the selloff. And what do rising bond yields reflect? Rising interest rates. So, are we seeing the beginning of the next big downturn in the business cycle?
The SchiffGold Friday Gold Wrap podcast combines a succinct summary of the week’s precious metals news coupled with thoughtful analysis. You can subscribe to the podcast on iTunes.
This hasn’t been a great week in the cryptocurrency world. Facebook announced it is banning all ads that promote cryptos, including Bitcoin. According to Zuck’s people, Facebook has to protect users from “financial products and services frequently associated with misleading or deceptive promotional practices.” By that rationale, Facebook should probably ban all political advertising. At any rate, the announcement sent the price of Bitcoin spiraling downward yet again. It is below $8,000 as I write this.
The Indian government added fuel to the fire, announcing it wants to “stamp out cryptocurrencies.” I say good luck with that. It will never happen. But I’m sure the government will make a lot of people miserable in the process.
So, anyway, a bad week for Bitcoin. And I’ve got some news that’s going to make it even worse for some of you crypto fans out there.
It’s no secret that 2017 was a down year for the precious metals market in the United States. Looking at US Mint sales figures tells the story. In 2016, the mint sold nearly 1 million ounces of American Gold Eagles. Sales figures in 2017 came in at just over 302,000 ounces.
Meanwhile, demand for gold surged in China last year. Imports of gold into India increased. So, what’s up with America?
In two words – Donald Trump.
Janet Yellen sang her swan song this week.
As expected, the Federal Reserve left interest rates unchanged during the Federal Open Market Committee meeting. The next hike will come after Jerome Powell takes the reins.
As Peter Schiff put it, Yellen got out of dodge.
Gold consumption in China grew 9.41% in 2017, according to information released by the China Gold Association. Gold jewelry demand, especially in poorer regions, helped drive overall demand higher.
The Chinese consumed 1,089 tons of the yellow metal last year. The South China Morning Post called the surge in demand “a big turnaround” after a 6.7% slump in 2016.
The price of Bitcoin fell below $10,000 this week. It rallied once again and pushed back above that key level, but turmoil continues to plague the world of cryptocurrencies.
We’ve been advising a diversified approach to crypto investing. Recently, Franco-Nevada president and CEO made a similar recommendation.
If you need to hedge your Bitcoin position, buy gold.”
