Learn the current environmental factors that may influence the price of gold…is now the time to buy?

Forbes just published an article titled “Jim Cramer’s Stock Market Warning Is Spot On – So, Sell Something.” The author highlights Jim Cramer’s warning against Wall Street’s overoptimism in the stock market, and highlights reasons why investors may want to sell some of their equities in light of the potential overoptimism.

So how does this relate to investing in metals? We frequently tell our clients a potential pullback in the equity markets is not necessarily a reason to invest in metals. Many don’t realize that there is not a strong negative correlation between fluctuations in the equity markets and metals spot prices (i.e., if the stock markets decrease, metals prices don’t necessarily increase). We do, however, typically see a positive correlation between a disruption of environmental factors that create volatility and uncertainty, and metals prices (i.e., when volatility and uncertainty increase, metals prices tend to increase). The article does a wonderful job outlining current environmental factors that may disrupt fundamentals and increase risk. Here are some of the factors, quoted directly from the article:

1. The Fed’s inability to produce real economic improvement

2. The flu season joins the coronavirus pandemic

3. The continuing malaise among banks

4. Companies discussing survival actions by year-end

5. Financial system stress – e.g., commercial mortgage loan credit quality and pricing

6. Enormous global public debt

7. Widespread overleveraged organizations and funds that low interest rates cannot cure or protect

The article can be read in its entirety here.

While you may not need to sell your equities, you may want to consider diversifying into precious metals.

Source: Tobey, T. (2020 November 13) Jim Cramer’s Stock Market Warning Is Spot On – So, Sell Something. Retrieved from https://www.forbes.com/sites/johntobey/2020/11/13/jim-cramers-stock-market-warning-is-spot-on–so-sell-something/?sh=1836928d88dd

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