Things are changing fast. That is obvious. Most everyone is aware that tariffs and retaliatory tariffs are being proposed, implemented, delayed, and postponed day after day. One of the MANY reasons that stock “markets” have been struggling lately is that markets dislike uncertainty- and we are getting that in spades.

One thing that is hardly ever mentioned on the financial game shows is what assets actually perform well in times of uncertainty- like gold and silver. While gold has hit numerous all-time highs just like the S&P 500 there is barely a peep at its performance. In fact, gold is the #1 performing asset class since the year 2000. The only thing that has had better gains is Bitcoin which I consider total speculation and devoid of any actual VALUE like a stock or hard asset.

Anyone who gets biased information like this that only mentions what the advertisers are selling will not be served well in the long run.

As I was thinking about what to write this week a saying came to me that as I look for the best places to invest, I want to use history as my guide and data as my roadmap. By that I mean I want to see how similar scenarios have played out in the past. This is because someone once said that “history doesn’t necessarily repeat itself, but it often rhymes”- meaning it may not play out exactly the same way but could be remarkably similar.

When it comes to data- even though with the central bank’s interference in the “markets” making most valuation models irrelevant (until they are again) we try to determine based upon then the price, industry outlook, economic conditions, performance, etc. what the next moves in asset classes or individual securities may look like. This just allows us to make an educated guess because other things like black swans can have an enormous impact. One glaring example would be when the USA slapped sanctions on Russia and any assets (that were performing extremely well) were rendered WORTHLESS with the stroke of a pen.

Having said all of that, the last 100 years has provided us with some examples of what we may see going forward.

I was watching Charles Nenner- former Goldman Sachs and now expert on cycles who has a large following and has been extremely accurate with his forecasts, his models say we are in a situation similar to 1928. I believe this to mean that we are likely not on the verge of a crash just yet- even though back in December I wrote that thought that March 2025 would be a time that could be dangerous.

If we look at what happened then, the economy was turning down in 1928. The crash in 1929 was the crescendo which led to an 80% drop in the DOW and the evisceration of the economy.

In August of 2007, the cracks that led to the biggest crash (so far) of my lifetime were clearly starting to show. 14 months later “markets” dropped anywhere from 35-50%. Why not 80%? Because at DOW 6000 the Fed stepped in, started buying everything and they have never stopped. What is the actual VALUE of the S&P, DOW, and NASDAQ? I believe we will find out soon and many will be crying.

When we talk about valuations being higher than ever that is not a reason for euphoria but a reason to take some risk off of the table. (Why does Warren Buffett have $375 BILLION in cash and is holding more T Bills than the Fed?)

Another Trends Forecaster- Gerald Celente- who puts out the Trends Journal has said that the Nasdaq Crash 2 has begun. In 2023 he wrote “2024 will be a golden year for gold”. Can the powers that be hold it off a while longer?

In the crash of 1929 to 1937 the DOW lost 80% from peak to trough. At the same time gold stocks rose 575% and the physical metal rose 75% (by government decree). Could this be part of the reason for all of the gold revaluation talk?

A little more recently the Nasdaq crashed in 2000. There was FAR more intervention by those “in charge so the loss in the Nasdaq between 2000 and 2008 was MINUS 27%. At the same time, gold miners, measured by the XAU ROSE 393%. Physical gold ROSE 228% from $280.00 in 2000 to $920.00 in 2008. Sound Familiar? It’s not an exact repeat but it certainly rhymes. (Macrotrends)

How many actually know that gold outperformed all the major US indexes last year already- before any meaningful downturn in the “markets.” How many are aware that even with that, Goehring and Rosenzweig, in my opinion the gold standard in natural resource research and commentary have noted that hard assets have NEVER been as undervalued in relation to paper assets as they are today.

I believe a main reason for all of these historical facts is that we go through cycles where it is best to be in paper assets (like when interest rates are 18% or the Fed is pumping up asset prices- until the ultimate inflation puts an end to the games) and there are other times when the public loses faith in paper assets and computer blips and wants a real return for their labor and products.

I believe that all the information I am digesting is telling me that a shift is underway from paper assets and into hard assets. I also believe we are still early, and the major gains lie ahead. It is pretty obvious that those at the top of the food chain (central banks, major banks, hedge funds, and billionaires) are all purchasing gold in particular but hard assets before the general public catches on. What is Warren Buffett buying?- We know not much- but he is buying oil stocks.

Personally, I like the gold mining stocks which have a historical 12-15% weighting in the S&P but currently represent around 2% of that index. I also believe that the greatest gains still lie ahead in gold and in particular silver.

Having said all that, it doesn’t mean that the “markets” can’t go higher from here for a while. The way I look at it is that I am getting a similar return now with an undervalued asset that has a bright future and I am underweight assets that are overvalued and could collapse at any time.

Be Prepared!

Any opinions are those of Mike Savage and not necessarily of those of RJFS or Raymond James. Expressions of opinion are as of this date and are subject to change without notice. The information in this report does not purport to be a complete description of securities, markets or developments referred to in this material. The information has been obtained from sources deemed to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct.

The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the US Stock Market. The Dow Jones Industrial Average (DJIA) commonly known as “The Dow” is an index representing 30 stocks of companies maintained and reviewed by the editors of the Wall Street Journal. The Nasdaq composite is an unmanaged index of securities traded on the NASDAQ system.

Commodities are generally considered speculative because of the significant potential for investment loss. Commodities are volatile investments and should only be a small part of a diversified portfolio. There may be sharp price fluctuations even during periods when prices are overall rising.

Precious Metals, including gold, are subject to special risks including but not limited to price may be subject to wide fluctuation, the market is relatively limited, the sources are concentrated in countries that have the potential for instability and the market is unregulated.

Diversification does not ensure gains nor protect against loss. Companies mentioned are being provided for information purposes only and is not a complete description, nor is it a recommendation. Investing involves risk regardless of strategy.