The week closed with the Dow Jones Index down almost 2% from its last all-time high. Realize the bulls are only happy when the object of their affection is making new all-time highs, something the Dow Jones failed to do this week.
So with the Dow Jones down 1.89% from its last all-time high at week’s close, people are a bit disappointed. But I’m remaining bullish for as long as the Dow Jones remains above its red BEV -7.5% line in its Bear’s Eye View chart below. Actually, for as long as the Dow Jones doesn’t see a double digit BEV value (-10% or lower), there is good reason to remain bullish on the stock market.
But this is a race I don’t have a horse in, as I believe now in 2020 the potential for profits in the precious metals far exceeds what is possible in the stock market. I still follow the Dow Jones because it’s important for any market commentator to do so.
Next is the Dow Jones in daily bars; it’s looking good. I admit it could look better, but so far the advancing Dow Jones hasn’t contracted a case of the coronavirus. Should (when?) that happen it will result in a drop in the Dow Jones that will make head-line news in the non-financial media.
At these lofty levels the stock market is priced for perfection, as if our world is one where nothing bad ever happens, a “market reality” where all surprises are pleasant. But we don’t live in a perfect world. We actually live in a world where dark and evil things happen all the time, and that possibility is currently not priced into stock market valuations.
Should the coronavirus upset the current worldview now operating at the NYSE and NASDAQ exchanges, the stock market could deflate quickly into deep double-digit percentage declines in an amazingly short time.
I imagine the exact opposite would happen to the price of gold and silver should a global pandemic of coronavirus become a prime factor in the stock market.
I admit its more than a bit mercenary factoring into one’s personal investment decisions the potential for deaths of tens-of-millions. But the markets are a vast ocean, as we are but tiny boats that must traverse it. Should the Dow Jones begin a series of 2% days; I’d Get The Hell Out of Dodge City Fast.
Shifting one’s investment capital into precious metals and mining shares seems a sensible thing, a good strategy to protect yourself. And researching the precious metals mining sector for companies one might invest in is a good thing to do before you actually make the trade.
by Mark J Lundeen for Gold-Eagle