Equities Decline Could Boost Gold Shares

When talking off-mic right before Michael Oliver and I went live on my radio show last Tuesday, he told me the equity bulls for sure don’t want to see 2800 violated this week. But they did! And I’m thinking this could be the start of the end of one of the longest equity market bulls in history. At the market close on Wednesday, May 29, the S&P closed at 2783.02. There are a host of fundamental reasons that even the optimistically contrived government economic stats may soon take away bragging rights from our President. But the most obvious one is the trade dispute, which a growing number of investors are realizing will not be over soon. Not only that, but it also has the potential to spiral down into something very ugly, from a global trade point of view. So, an economic decline that is overdue, along with a cessation of stock buybacks, most of which have been funded with manipulated cheap money in the past, may start to hurt balance sheets if we are heading into an economic recession.

Now the good news from our point of view as investors in gold shares is that a decline in equities may be the key to driving gold prices higher or at least in stimulating money flows from mainstream stocks into the beleaguered gold share sector. That for sure was Michael’s point on my show last week. The negative correlation between equities and gold is much more apparent than the much-assumed negative correlation between the dollar and gold. You may want to listen to Michael’s well-articulated comments here in the following link: https://jaytaylormedia.com/media/taylor20190528-1.mp3.