Building Wealth Doc's note: In times like these, gold is the asset you want to hold. In today's issue, Dr. Steve Sjuggerud explains why we're in the middle of a perfect storm for higher gold prices...
"There is no physical gold available today," my good friend and legendary gold dealer Van Simmons told me recently.
What I assumed he meant was that there was a shortage of gold to buy. So I figured if you wanted to buy gold, you'd have to pay higher premiums over the gold price quoted online.
I was right. But there's more to it than that. It's a situation you never see in precious metals. And it could lead to huge upside from here...
"I've never seen anything like it in decades," Van said. "Gold refiners around the world are shutting down due to coronavirus. So the supply of physical gold is disappearing for now. That creates the risk that there won't be enough gold available in New York to fulfill futures contracts. It's crazy."
Van is not one for hype. He has been at this for many decades. He has seen it all... But he hasn't seen this.
"It's not just gold," Van explained. "The premiums for physical silver went crazy this week as well." (The premium to buy silver soared 10-fold in a couple days, he added.)
Here's what's going on...
The physical silver exists... but nobody will deliver it. Due to the coronavirus, not enough folks are willing to load it on the trucks or planes.
It's all new territory.
What it adds up to is a perfect storm for higher precious metals prices...
- You have no supply and plenty of demand. This is Economics 101 – when there's more demand and less supply, prices go up.
- You have the government "printing" money and passing it out. (We can expect "$6 trillion in coronavirus stimulus," Larry Kudlow of the Trump administration said in March.)
- You have interest rates at essentially zero. Precious metals pay no interest, so they have trouble competing with money in the bank. But when money in the bank pays zero interest, precious metals become attractive again.
These are three massive catalysts. And they all point to the same end result... higher prices for gold and silver.
And importantly, you haven't missed it. Gold and silver haven't soared yet... it's quite the opposite.
Over the last two months, gold is up just 4% and silver crashed nearly 15%. But it's only a matter of time until the catalysts above catch up to current prices. And when they do... look out.
The simplest way to own gold is the SPDR Gold Shares Fund (GLD). For silver, you can own the iShares Silver Trust (SLV). These simple funds track the spot price of gold and silver. And while there are better ways to profit from what's going on, they're both solid options.
No matter how you do it, consider adding some precious metals to your portfolio – now.
Good investing,
Steve
Editor's note: This morning, gold-investing legend John Doody spoke to our subscribers for the first time this year. He answered readers' most pressing questions, talked about the recent surge in gold, and detailed his outlook for the year. Click here to watch now.