2 Charts: The Gold Supercycle Bull Market Is Just Starting
By Joseph Sherman
Commodities are in a historic supercycle
At this time, commodities like gold and silver are cheap. In fact, compared to the S&P 500, they have never been cheaper. The chart below shows the ratio of the S&P 500 to the S&P Commodity Index, explaining we are in a gold supercycle.
The chart covers the past 50 years, which means it includes crises such as the Gulf War in 1990 and the 2008 Financial Crisis. As you can see, commodities are dirt-cheap today. The chart also shows that each low point has been followed by an aggressive correction.
To enable that, two things need to happen: First, the S&P 500 needs to go down, and due to the high unemployment numbers and the extremely overvalued stock market, the S&P 500 should decline in the next few months. Second, commodities need to go up in price, which they did in 2020 when gold, for instance, set a new all-time record.
How can I use the gold supercycle to grow my wealth?
First, go light on S&P 500 companies — and no leverage, please. Second, diversify with physical assets.
Since buying physical grain, oil, or steel is not something you can do, two of the easiest resources to allocate to are physical gold and silver. My next article will be dedicated exclusively to silver. This one is about gold.
Will the gold bull run continue?
Like all markets, the gold market moves in cycles, including remarkable highs and then corrections. We saw gold set a new record in 2020, then decrease slightly, but the precious metal is still going strong, and the bull run looks like it’s going to pick up again. To see where we are in the cycle, let’s look at our second chart, comparing where we are now to the four large gold supercycles in the past 100 years:
As you can see, the gold market still looks like it’s going to continue when compared to other gold cycles over the past 100 years — during each of the significant gold rallies in the past century, gold gained hundreds of percent.
I’m convinced the gold supercycle is only just starting. If you can join it, you’ll see huge profits once it gets going.
Why will the gold supercycle continue?
There are several reasons why I think that the price of gold will climb much higher than it is today. First of all, we are still in the middle of a pandemic with high unemployment and financial instability. Yes, the stock market keeps hitting all-time highs, but the stock market doesn’t reflect the real economy that you and I are living in.
Second, inflation is rising and will likely keep rising as the Fed is focusing on economic recovery at the cost of higher prices. As the central bank keeps printing money, the dollar will continue to weaken, which leads to higher prices.
Third, our federal debt is higher than ever before, and it’s continuing to grow rapidly. At some point, our government will need to repay that debt — or default.
All of these factors are positive for gold!
Notes from the lockdown
Our company has now been working remotely since the beginning of the pandemic. We have not let go of any employee — in fact, we have hired even more — and they are all safe. I’m very happy to see that we’re able to provide the same level of service to our clients and provide anyone interested in protecting and growing their wealth with the information they need in order to assess if physical gold and silver are right for them.
It’s heartbreaking to see the daily toll of COVID-19 deaths in our country and worldwide. Thank you to everyone that is standing on the front lines of this pandemic by providing essential services while taking a personal health risk. From our vantage point, a special thank-you goes to our suppliers, especially the hardworking men and women at the Delaware Depository that send out shipments to our clients. Thank you, Dawn, Steve, and all your team members. We are grateful beyond words for your dedication.
May you all be healthy and safe.