Should You Buy The Panic?

Frank Holmes on Bloomberg March 2020

If anyone has the right to say “I told you so,” it’s Bill Gates.

Two years ago, the co-founder, former CEO and now a former board member of Microsoft urged governments to step up their preparedness in the event of a modern global pandemic. Such an event, Gates warned, could conceivably be more dangerous than any other threat facing humanity today, including nuclear proliferation, due mainly to the fact that we’ve become so interconnected.

Because new vaccines take time to develop and deploy, the U.S., in particular, needed to invest in “antiviral drugs and antibody therapies that can be stockpiled or rapidly manufactured to stop the spread of pandemic diseases or treat people who have been exposed,” Gates said in a speech at the time.

And in a 2018 interview with STAT, he said he found it “strange… that the world isn’t doing more” to brace itself for a potential pandemic. “We think the idea of spending what would be a tiny part of the budget to be ready for a pandemic makes sense,” he added.

The 10 Percent Golden Rule Remains Prudent

This last comment reminds me why it’s so important to allocate 10 percent of your portfolio in gold and gold mining stocks. It “makes sense” to be ready for a market crash such as the one we’re seeing now as a result of the spread of COVID-19, which the World Health Organization (WHO) recently declared a pandemic and, on Friday, President Donald Trump declared a national emergency.

Gold bullion went negative for the year as of Friday, as investors liquidated their holdings to ride out the volatility. And although they haven’t sold off as deeply as the rest of the market, gold mining stocks look cheap now, meaning it may be time to consider adding to your exposure.

(Click on image to enlarge)

gold and gold mining stocks have outperformed the market so far

 

As of Friday, gold prices were up about 3.5 percent for the three-month period and up 18 percent from a year earlier. What this means is that we could see very attractive revenue and cash flow from gold mining stocks this quarter.

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Disclaimer: The FTSE Gold Mines Index encompasses all gold mining companies that have a sustainable, attributable gold production of at least 300,000 ounces a year ...

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