Run, Collapse, Repeat…

If you’ve been paying attention to the market for the past four months, you should realize by now that it’s completely disconnected from reality. Political division has successfully provided enough media obfuscation to confuse anyone, which is why it has become necessary to leave opinion behind and look at nothing but the facts. With 50 million people out of work, major coronavirus outbreaks threatening to lock down major states, and a potential GDP downturn this year many suggest could approach 40%, it’s time to understand the factual dynamics affecting our stock market. As we digest the reality of our situation, it’s time to take a good look at the only market force truly affecting our stock market. The upward surge is obviously not due to a growing economy, strong economic stimulus, or bright economic horizon at the end of a dark tunnel. The only factor directly and consistently affecting the stock market is the United States Federal Reserve Board (the Fed).

Despite the human carnage being witnessed on Main Street, Wall Street and the S&P in particular, continue to race toward new highs. Central banks around the world have cranked up the printing presses and injected more than $11 trillion of liquidity into the global economy since the Great Recession of 2008. Between September of 2019 and February of 2020, the Fed increased its balance sheet by more than 10%. Not surprisingly, the S&P was up 11% over the same period of time. But following the March stock market crash, the Fed has pumped an additional $3 trillion into the economy allowing the market to rally 44% off its March lows. Research provided by Capital Economics indicates that over the next few months the Fed’s balance sheet could grow to as much as $10 trillion.

Just like the last, cheap Fed money has fueled this current rally by funding stock buyback programs and making stocks less worthy, yet more expensive than ever. The Fed interceded before the market fully corrected last time and probably will again this time, but make no mistake about it, the market is most probably looking at a minimum 40% correction and 50% to 60% if the Fed chooses not to interfere. But that is highly unlikely, because the Administration has certainly provided the Fed with marching orders to limit or curtail any such negative market reaction. It’s also pretty safe to assume that as long as the Fed continues printing money and the Administration keeps providing stimulus, the stock market will continue the current pattern of quick recoveries and violent selloffs. If you’ve got a crystal ball, the stock market could provide a money making opportunity, but if you’re not making a full-time job of it, there’s a good chance you’re simply running into a burning building.

Precious metal prices are on the rise, because they respond to economic reality. Not only do precious metals offer the opportunity for tremendous potential profit, but they also offer the safety and security of maintaining value when traditional financial instruments falter and fail. This market, like the coronavirus shouldn’t be taken lightly. Don’t take chances with your portfolio, assets, or legacy. Call the experts at American Bullion for knowledgeable and caring assistance, now. Call (800) 653-GOLD (4653).