Three Investments for Today’s Topsy-turvy World

As the world moves further down the negative interest rate rabbit hole, gold continues to surge higher.

Which makes sense…

After all, if banks are going to start charging you to keep money in the bank, why not put some of your savings in gold instead? At least you won’t get charged for the privilege!

This kind of thinking is already driving gold prices higher.

While gold still hasn’t hit its all time high in US dollar terms (US$1,900) yet, it has in 73 other countries’ currencies already.

Exclusive Investor Report: Three reasons you should buy gold now. Download your free report.  

Check out this chart:

Gold Currency Price Chart Money Morning

Source: Zero Hedge
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This chart shows the price of gold surging in terms of British pounds, Canadian dollars, Indian rupees, Australian dollars and Japanese yen.

Part of that is due to the recent rise of the US dollar. As most currencies fall against the US dollar, the gold price automatically rises (in their own currency’s terms), even if the US dollar gold price stands still.

Why’s the US dollar rising then?

Like gold, the US dollar is a safe haven asset. So, the combination of negative interest rates, trade war battles and a general environment of ‘fear’, has motivated scared investors to move their funds there.

I’m not sure if that was President Trump’s plan?

Probably not, if his latest tweet is anything to go by:

Money Morning

Source: Twitter
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Look what he’s pushing to happen, though.

Trump wants US interest rates to fall to reduce the value of the US dollar. But as I discussed yesterday, that just means every other country will do the same thing, too.

It’s economic madness and will leave little room to move should a real crisis hit.

Regardless, if rates do continue to fall, gold should continue to rise.

And Bill Murphy, the Chairman of the Gold Anti-Trust Action Committee, sees big price gains for gold ahead…

Is gold melting up?

Murphy said:

The all-time high in U.S. dollars for gold is around $1,900 per ounce. It is going to take that out and start heading for $3,000, and I think it is going to do this faster than people think. The tipping point has been reached …

Murphy’s not alone in seeing a ‘stronger for longer’ theme when it comes to gold prices.

My colleague, Greg Canavan, over at the Rum Rebellion thinks we could see a re-run of a huge 1970s style gold move.

Gold Investments Surge 1970s

Source: Port Phillip Publishing
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In the ‘70s era of glam rock, gold stocks rose an astonishing 652% on average! Meanwhile, the share market barely budged.

Could that be how the next 10 years play out?

Who knows?

But you should read Greg’s report in its entirety here to see how you can benefit if it does.

Anyway, I’m certainly no gold bug, but like you I’m not going to knock back the chance to make some money if it presents itself. So, it’s a scenario I’m looking at closely.

But most of my trading attention right now is in two other areas that could move higher for much the same reasons as gold.

And in my opinion, the gains here could be even better…

Could these two investments do better than gold?

The first is silver…

Gold bug Bill Murphy again:

For anyone that wants to get involved in precious metals, silver is going to be a home run. It actually just started…

Gold goes first because the physical market is tight. Then, the industry and silver people are going to make sure they have secure supply, and all of a sudden it’s going to be like a panic…

Silver is the bargain of a lifetime. It’s certainly the cheapest asset on the planet.

Strong words from Bill!

But the price action is certainly supporting his view. Silver prices just booked their largest daily rise in three years last week.

And Paul Wong of Sprott Asset Management thinks this is the trade to get on:

By all historical measures, we should see silver play a phenomenal catch-up trade to gold in the next few months,’ he wrote.

The second one to watch is bitcoin [BTC].

It’s funny because a lot of gold bugs I know hate bitcoin. Which makes no sense to me.

Like gold, bitcoin is a hedge against the corruption of the financial system. Like gold, it’s limited in supply. And like gold, it’s essentially inflation proof.

But bitcoin takes gold to the next level because as a technology, it’s always improving.

In fact, you’ve got 1000s of the brightest minds in computer science and cryptography all working day in, day out to make cryptocurrencies better.

Here’s the amazing thing…

By the act of owning some bitcoin, you’re a part owner in the most fantastic start-up enterprise of all time. One that’s literally taking on the entire financial system.

And winning!

For those who can stomach the volatility, it has been an unbelievable long-term investment.

Bitcoin is the world’s best performing asset for eight of the past 10 years.

Bitcoin best performing investment

Source: Binance
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If you can think in years instead of weeks, you might see further exponential gains ahead, too.

For example, VC Investor Tim Draper just predicted bitcoin will hit US$250,000 by 2023. Today it’s at US$11,500.

Of course, he could be wrong. In fact, he probably will be. I don’t think anyone can predict with any sort of accuracy what the bitcoin price will be, and by when.

However, I can say this…

A hedge against fear and fear-peddlers

The stars are certainly aligning for bitcoin right now.

If the world keeps on destroying the value of money through negative interest rates, if government debt continues to grow and if trust in banking continues to fall, then bitcoin is likely to grow faster and more powerfully than anyone can imagine.

But here’s where it differs from gold or silver.

As a technology play too, bitcoin is set to grow even if the world economy doesn’t tank.

It’s not purely a hedge to bad times, though that’s the current theme driving the price today. It’s also a bet on technology, which, as you’ll know, has been the best sector over the past two decades.

Gold, silver, bitcoin…they’re all ideas worth exploring.

But for my speculative cash, I think bitcoin will give you the most bang for your buck. No matter what the future brings.

Good investing,

Ryan Dinse
Editor, Money Morning

PS: Discover the hidden treasures available to everyday investors from this often overlooked sector of the market…Penny Stocks. Download your free report now.

Ryan Dinse is an Editor at Money Morning. He has worked in finance and investing for the past two decades as a financial planner, senior credit analyst, equity trader and fintech entrepreneur. With an academic background in economics, he believes that the key to making good investments is investing appropriately at each stage of the economic cycle. Different market conditions provide different opportunities. Ryan combines fundamental, technical and economic analysis with the goal of making sure you are in the right investments at the right time.  

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