The Bat Virus Lesson: Buy Gold

25 Feb

The Bat Virus Lesson: Buy Gold

A lot of things aren’t yet clear about COVID-19.  But one lesson is clear:  Buy gold to protect yourself in a crisis!

People around the world get the flu every year.  Some people die from it.   The important public health question is just how lethal any spreading strain is.  

We don’t know the answer about this coronavirus.    

Estimates in the press range from 0.04 percent mortality to 2 percent. 

The difference is a factor of 50.  It matters a lot.

Two percent of the US population is 6,540,000.  That is a wartime level of magnitude.  0.04 percent is 130,800.  That’s more than twice the number of Americans that died in the Vietnam war.

Fortunately, those numbers must be adjusted by the percent of people who would actually fall victim to the coronavirus.  It is estimated that about ten percent of the US population get the flu in any given year.  In a particularly bad strain, that may rise to 25 – 30 percent.  

We’ve taken the time to look at these numbers to show just how little is known about this disease.  The range of possible consequences is simply immense.

But we do know that in a crisis, the world turns to gold.

That was evident on Monday (2/25) when both South Korea and Italy raised the alarm about the spread of the virus in those countries.  So much for the hope it would be mostly “contained” to China.  The Dow Industrials fell more than a thousand points.  It was the worst day single day in two years for both the Dow and the S&P 500.  Gold raced toward the $1,7o0 mark.  On the spot (physical cash markets) gold hit a high Monday of $1,688, a seven year high, before settling back a little to close at $1,671. 

In reviewing what we have written about the coronavirus so far, we would like to repeat our advice: to use this outbreak as time to pivot to caution with stock and bond holdings.  In January we looked down the road and wrote that from what we could see, the coronavirus “looks very worrisome indeed.  It may be much bigger than anything the world has experienced since the Spanish flu epidemic that claimed hundreds of thousands of American lives just over 100 years ago.”  (The Coronavirus, Black Plagues, and Black Swans)

On February 9 (In a Crisis), we wrote, “Some of our readers will recall all the things that were shut down after 9/11, especially air travel.  Today’s epidemic has us wondering how long these grids can function if whole cities and workers are quarantined.  We may learn from China’s experience.  In any case, we wonder what would happen if the increasingly stressed national electricity grid went down, or if transportation were broadly encumbered.  

“What would you do if a power grid interruption meant ATM machines stop spitting out cash?  Or if emergency health measures mean that banks and other business can’t open for some time?

“Tragedies can provide us valuable reminders.  When the questions have to do with the monetary system, the answer is that in a crisis you would be very happy to own gold and silver, the world’s most liquid commodities. Precious metals have weathered the storms and saved fortunes and even lives for people throughout the ages and around the world.”

As we write in the middle of the trading day on Tuesday (2/25) everything on our screens is red.  That means down.  The Dow is off more than 900 points.  And gold has given back some of its Monday gains.  We are grateful for that, because it means a more favorable buying price (for now!) as this crisis continues to unfold.

The eventual impact of COVID-19 is unknown.  But the centrality of gold in a global crisis is very well known.

If you have not reduced your exposure to stock and bond markets and spoken to a Republic Monetary Exchange gold and silver specialist about protecting yourself and your family with gold, we urge you to do so at once.