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This is the final installment in a three-part series exploring three key reasons why gold could be the best hedge in the event of a major market correction. For part one, click here. For part two, click here.

As we wrote previously, there are many stories in the news lately exploring the various ways to protect yourself from a major market correction. They talk about hedge funds shorting US municipal debt, junk bonds, and foreign bonds in Asia and the eurozone. However, hardly anyone in the media mentions the use of physical gold bullion to protect your savings from a stock market crash.  We believe gold will outperform any of these conventional “safe havens” for three key reasons.

The third promising factor for gold in the event of a major market correction is that there are simply few alternatives. Even the conventional “safe bets” don’t hold up to scrutiny in today’s environment.

Treasury bonds have been one of the most traditional investments for protecting savings and providing cash flow. However, bond yields are currently at record lows and will probably move even lower in the event of a market correction. The return on a 5-year Treasury has fallen by an average of 4.3% in each of the past three recessions. In the likely event that this trend continues in the next market correction, the nominal yield could become negative. In other words, investors would be paying the government to take their money!
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This is part two of three in a series exploring three key reasons why gold could be the best hedge in the event of a major market correction. For part one, click here.

As we wrote yesterday, there are many stories in the news lately exploring the various ways to protect yourself from a major market correction. They talk about hedge funds shorting US municipal debt, junk bonds, and foreign bonds in Asia and the eurozone. However, hardly anyone in the media mentions the use of physical gold bullion to protect your savings from a stock market crash.  We believe gold will outperform any of these conventional “safe havens” for three key reasons.

The second promising factor for gold is that many of the “weak hands” have been shaken out of the gold market. This means that short-term speculators who were just jumping on the bandwagon have exited the gold market. Those that remain are primarily long-term holders who understand the fundamentals of gold.

A primary example of these “weak hands” is those who held “paper gold” investments such as exchange-traded funds (ETFs). In this type of investment, you don’t actually own gold. You simply put your money into a fund that is invested in gold companies or gold bullion. This is very different from holding the physical precious metal yourself. These paper gold investments are very popular with short-term speculators who can make quick money if they’re savvy enough.
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This is part one of three in a series exploring three key reasons why gold could be the best hedge in the event of a major market correction.

There are many stories in the news lately exploring the various ways to protect yourself from a major market correction. They talk about hedge funds shorting US municipal debt, junk bonds, and foreign bonds in Asia and the eurozone. However, hardly anyone in the media mentions the use of physical gold bullion to protect your savings from a stock market crash.  We believe gold will outperform any of these conventional “safe havens” for three key reasons.

The first promising factor for gold is that it is heavily out of favor. That is to say, the financial media loathes the yellow metal. Bullish sentiment on gold is currently at its lowest level since 2004. Due to the 30% decline of gold in 2013, those who have long hated it have been doing a victory lap. This is despite the fact that gold rose nearly 600% from 2001 to 2012.

Gold’s detractors somehow see fit to celebrate being correct once in 13 years. However, being on the ball less than 8% of the time since 2001 is nothing to brag about. With that kind of batting average, they couldn’t make the cut on a little league baseball team, let alone presume to give advice on how people can protect their hard-earned wealth.
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In an exclusive interview originally published in Euro Pacific Capital’s summer issue of The Global Investor Newsletter (found here), Andrew Schiff spoke with Peter Boehringer of the German Precious Metals Society about the latest false news reports concerning Germany’s gold repatriation efforts.

A June 23 Bloomberg News story entitled “German Gold Stays in New York in Rebuff to Euro Doubters” made the seemingly straightforward case that the German authorities had decided to reverse course on a plan announced in 2012 to bring home some 300 metric tons of German gold that had been on deposit at the New York Federal Reserve since the 1960s. According to the article, German representatives had gone to New York, seen their gold, were convinced that it was in good hands, and decided that the hassle of putting it on a plane and sending it back to Germany was simply unnecessary. The article quoted a spokesman for German Chancellor Merkel who said, “the Americans are taking good care of our gold.” The article even quoted Peter Boehringer, one of the leading private advocates of the German repatriation movement, as saying their campaign to pressure German authorities “is on hold.”

When the Germans originally asked for their gold back, the Federal Reserve countered with a painfully slow eight-year delivery period. This struck many as strange given that the total request only represented 5% of the gold reportedly held at the Fed’s New York vaults. The delay severely whipped up concerns that long-held theories about imaginary gold were actually true. The Bloomberg article appeared to dismiss all these concerns and bring the case to a close. Or did it? Almost immediately, people close to the matter cried foul.

I caught up with none other than Peter Boehringer of the German Precious Metals Society for this exclusive interview.

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• China’s 500 Metric Ton Gold Gap Fuels Talk of Stockpiling, Financial Times

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Peter Schiff appeared on BNN’s Business Day to discuss the poor US jobs report released earlier today, and noted that no one should be surprised by the bad economic numbers. The phony recovery is on life support, and the bubble is getting ready to pop.

“We are facing an economic crisis that much worse than what we had in 2008… Alan’s Greenspan bubble blew up on Ben Bernanke’s watch. Now Ben Bernanke has made all the same mistakes as Alan Greenspan, only bigger, and when his bubble blows up on Janet Yellen, it going to be much worse.”

Watch the Full Interview Here

Follow us on Twitter to stay up-to-date on Peter Schiff’s latest thoughts: @SchiffBlog
Interested in learning about the best ways to buy gold and silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!

• Will Gold Be 2014’s Comeback Kid?, CNBC

Follow us on Twitter to stay up-to-date on Peter Schiff’s latest thoughts: @SchiffBlog
Interested in learning about the best ways to buy gold and silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!