The bull market in precious metals stocks has opened and silver stocks will "crush" the Dow Index

December 26, 2019

London (Dec 26)  The entire precious metals sector is making a significant upward breakthrough, many mining stocks, especially silver stocks, are soaring. Overnight spot gold rose above $1500 an ounce, while silver rose nearly 2 per cent.

With the Chinese Lunar New year looming, Stewart Thomson, president of, Graceland Investment Management, expects strong Chinese demand to keep gold prices in a strong "rising pattern" at least at the start of the important holiday.

Stocks in the United States rose several times during the Roosevelt, Reagan, Clinton and Obama administrations, but have risen only about 50 percent so far since Trump took office, in part because Trump did not increase debt as other US presidents did, Thomson wrote. Government debt grew by nearly 200% under Reagan, 1000% under Roosevelt, but only 10% under the Trump administration.

He believes the stock market will not behave as it used to be unless the Fed becomes more absurd than it is now, and Mr Trump pushes debt into danger. Thomson points out that the growth problem in the United States is ultimately a population and debt problem. Mr Trump inherits 100 per cent of government debt as a proportion of GDP. By contrast, when Roosevelt and Reagan were elected presidents, the ratio seemed to be only about 30%. Compared with his predecessors, Trump has no room for a big increase in debt, and even a small increase in debt is extremely dangerous. Government debt is completely out of control, as are corporate and private debt. The current demographics of the United States do not seem to be able to create higher GDP growth to "get the country out of debt". This approach worked during Truman and Eisenhower's reign in the 1950s, when demographics were much more robust than they are now.

The gold breakthrough looks good, while the silver one looks better, Thomson said. "now, even a small increase in US government debt could be a spark of massive inflation, and the price of silver and gold suggests it may be starting to burn. Gold and silver are the main investment options today, which is the ultimate conclusion. "

Thomson said that the excellent small silver mine ETF (SILJ) looks great, and the current upward channel is intact. If silver prices rise sharply, it will push the SILJ parabola up.

Thomson said the easing of trade tensions opened the door to global economic growth late in the business cycle, which would lead to "good" inflation. At the same time, the depreciation of the dollar and US government, corporate and private debt are beginning to cause "bad" inflation. He believes investors who hold large amounts of silver stocks will reap returns. In his view, the biggest bull market in gold and silver stocks in history has begun, and whether Trump or the Democratic Party wins the US election in 2020, the bull market will accelerate. The ratio of the global X silver mine ETF (SIL) to the Dow Jones Industrial average suggests that silver stocks will "crush" the Dow.


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