Now More Than Ever, Beware the Bullish Siren Song

Precious Metals

Despite the overwhelming amount of evidence that the US economy is headed for a serious crisis, there are still millions of Americans who think that we can turn a corner and return to the stock market highs of February. They think that once COVID-19 peaks, everything will get right back to normal. And recent rises in stock markets are doing nothing to dissuade them.

Stock markets certainly had a good week last week, with the Dow Jones ending the week several thousand points above its yearly low. That had many analysts calling the bottom, saying that stock markets won’t get any lower, and that the massive amount of Federal Reserve stimulus will keep markets propped up for the rest of the year.

But that’s a classic case of wishful thinking that will end up trapping those hoping for another bull market. It could lure unsuspecting investors to pile back into markets, putting them at real risk of losing big once stock markets resume their downward slide.

If anything, the recent rise in stock markets should have investors who haven’t already protected their assets thinking about how they’re going to protect themselves. By cashing out now, they’re avoiding selling at the bottom of the market, saving themselves a lot of heartache.

We still haven’t even seen the full effects of the COVID-19 crisis on financial markets, and with government officials talking about months more of stay at home orders, we could see tens of millions of Americans out of work for months. Couple that with possible supply chain disruptions in food distribution due to agricultural workers contracting COVID-19, and the summer could get very dicey.

The only reason stock markets are still as high as they are is due to the Fed’s record stimulus. But the Fed can’t prop those markets up forever. With falling earnings due to the nationwide slowdown, stock price to earnings ratios are now higher than they ever have been, making stocks an even riskier investment than they were in February. And with a negative outlook for economic growth, it’s hard to imagine why anyone would want to invest in companies that are guaranteed to make less money in the coming months.

Now, more than ever, it’s time for investors to resist the siren song of stock market bulls. The facts just don’t support a return to a bullish stock market anytime soon. While “Don’t fight the Fed” may be a common refrain on Wall Street, there’s no denying that massive monetary stimulus isn’t a universal panacea. If it had been, markets never would have crashed in February and March. Look for the current Fed-inspired rally to fizzle out just as spectacularly.

Investors who want to protect their wealth need to starting looking at investing in gold and silver today. During the 2008 crisis and throughout its aftermath, gold and silver protected investor portfolios better than any other asset. Many investors who invested in gold back then find themselves even today with better portfolio performance than had they stayed in stock markets. If you’re looking to protect your retirement assets, you know that despite the recent rally, stock markets aren’t a sure bet for the future. Contact the experts at Goldco today to find out how you can protect your retirement savings with gold and silver.

This article was originally posted on Goldco.

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