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Safe Money Report: "There's Something Serious Afoot"
06/24/2019 5:00 am EST
While the bulls may deny it, the capital markets are speaking loudly and clearly: The U.S. economy is heading into recession in 2020, cautions, Mike Larson, growth and income expert and editor of Safe Money Report.
You simply don’t see the Treasury yield curve crashing, short-term rates plummeting, gold exploding, volatility rising, credit risk indicators climbing and defensive stocks dominating offensive ones to this degree unless something serious is afoot.
Moreover, the action all fits with my thesis that we began to transition OUT of a “true” bull market in January 2018 and IN to a totally different market environment. It’s one where safety, yield, and recession resistance are valued investment attributes.
What about the idea the Federal Reserve can just wave its magic interest-rate wand and “save” the economy and the stock market? I’ve already demonstrated why that Pollyanna view is misguided.
Now, it’s time to adjust your holdings to maximize your potential income and gains as rising recession risk causes radical interest rate shifts.
I recommend that investors buy a 10% position in the SPDR Gold Shares (GLD) at the market. This ETF owns gold on your behalf. The yellow metal has looked attractive to me since last summer.
Now, it appears on the verge of a major breakout — one driven by rising volatility, recession fears, and a need for “chaos insurance” among investors.
One other thing to keep in mind: While GLD doesn’t make dividend or interest payments, its “0% yield” beats the negative yield on trillions of dollars of bonds flooding the markets all around the world.
That makes it a relatively more attractive investment. No wonder it has already risen more than 4% in the past month, and should keep heading higher from here.
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