Capitalize on the Next Market Crash!

You may have heard that there are more millionaires created during a market crash. I want you to be one of these rare individuals that capitalizes on the next one!

All markets are cyclical. There is an expected recession or crash in the stock market every 8-10 years on average. The last recession occurred in 2008-2009.We are in 2019 and are certainly due for the next one!

The stock market is currently in a bubble and is in the late stages of its’ cycle prior to a recession. In other words, it is presently expensive to buy stocks. Astute investors prefer to buy assets at cheap prices. Ray Dalio, the owner of the largest hedge fund in the world, Bridgewater Associates, stated in 2018 that “we are in the 7th inning of the current economic cycle”. Dalio suspects that the next crash is likely to occur in 2019 or 2020. Dalio is not one to speculate as he studies market cycles and realizes that we are approaching the end of the current stock market cycle. He goes on to state  that at the beginning of a bull run in a stock market, interest rates are generally lowered by the Federal Reserve while at the end of a cycle, interest rates get raised. Presently, Jerome Powell, who is the new chairman of the Federal Reserve, has been raising interest rate. Since the 2008-2009 recession, the stock market has had an aggressive bull run. We have all heard of (stock) investors saying things like “If I only invested in Apple back in the day, I’d be rich!”. Statements like these imply that an investor must be an expert in picking the right stocks. In reality, it is more important to be invested in the stock market at the right time, namely after a crash. The same statement holds true for the precious metals market. The reason why timing is more important than picking an individual stock is because during a bull run, about 90% of stocks will rise in value along with the overall market. The same effect occurs during a bear market – 90% of stocks will fall in value as the overall markets crash. If you bought shares in Apple during a bear market, you would lose money! Simply stated, you would be wise to buy low and sell high.

We are already observing signs of weakness within the stock market. The S&P 500 Index tracks the average move of the 500 largest stocks in the United States. By observing the S&P 500, we can get a bird’s eye view of what the overall stock market is doing. Let’s observe what the S&P 500 Index (SPX) looks like over the last 20 years, where each candlestick represents one month of data:

Chart obtained from Questrade

A crash is often defined as a 50% drop, or more, from a previous high. In 2008, the SPX’s price was at about $1,500/share. It dropped to $666.79 in 2009, which is more than a 50% drop. The SPX is in a larger bubble today, than it was in 2008. The SPX’s high was almost $3,000/share. In order for a crash to occur, the SPX needs to drop to at least $1,500/share.

The Next Big Opportunity Explained…

In contrast to the overall stock market, gold and silver are currently under-valued (AKA are cheap)! These are assets that are NOT in a bubble! Gold and silver were in a bubble in 2011, but they have since dropped and are currently cheap to buy. Gold and silver have the net effect of re balancing a portfolio. A truly diversified portfolio means having a portfolio consisting of more than one asset class. Stocks and precious metals are 2 separate asset classes! In addition, gold and silver act as money – this is why central banks and governments hoard gold.

Owning paper assets, like stocks, without owning precious metals, is like not having life insurance. When the next crash  occurs, I would rather have my insurance pay the payout. In the stock market context, gold and silver tend to be viewed as insurance on a stock portfolio.

Chart obtained from
Legend: Orange = silver trend, Blue = gold trend

During the 2008-2009 crash, gold and silver did quite well. Gold and silver act as safe-haven assets during times of economic crises. By investing in gold and silver in the current market environment, you are positioning yourself to acquire protective assets while they are cheap.

We know that the stock market is overdue for a crash, while the precious metals market is under-valued and poised for a bull market run. I encourage you to protect your portfolio by investing in precious metals – the timing couldn’t be better. Even if you don’t own any other investments, gold and silver are one of the best opportunities in the current market environment! It is far better to enter the precious metals market early, then to miss an outstanding opportunity

-Shawn Sklar Bullion&Diamond Dealer