Investment guru Jim Cramer tells investors there’s a bull market in gold and you’d be wise to buy the precious metal right now.
The “Mad Money” host advised on CNBC that selling stocks now may prove to be a costly mistake.
Cramer says Federal Reserve Chairman Jerome Powell seemed to ignore “serious” weaknesses in the U.S. economy and hiked rates anyway.
“I have a better read on the economy than the Fed and I know they’re not going to listen to me,” Cramer said.
“I feel powerless, just like 2007, when I ranted that the Fed needed to start easing aggressively in order to stave off a financial catastrophe,” Cramer said.
He also recommended two sliding stocks that he said were “perfect harbingers of a softer economy”: Carnival Corp. and Accenture.
“If you’re buying stocks here, ... you’re making a bet that Jerome Powell will learn what I know already: that the economy’s downshifted enough ... that he doesn’t need to move, [that] he knows that the next rate hike will be real bad for Main Street,” Cramer said.
Cramer also suggested buying into the “bull market” in gold. He liked RandGold, a mining stock, and an exchange-traded fund mirroring the price of gold called the GLD.
While he confessed “the odds simply do not favor stockholders,” Cramer predicted that “when Jay Powell recognizes that he’s wrong, ... the market will come roaring back.”
“Sooner or later, the weakness will be undeniable and he’ll have to change course, which is a reason why you can own stocks,” he said. “I’m confident in my judgment, so confident that I’m sure Powell will have to reverse course, maybe in the next four months. When he does, you’ll regret selling because the market will rebound so fast.”
Cramer isn't alone in touting gold.
Goldman Sachs Group Inc. recommends an outright long gold position into next year. “If U.S. growth slows down next year, as expected, gold would benefit from higher demand,” analysts including Jeffrey Currie said in a Nov. 26 note that endorsed bullion as one of its top-10 trade ideas for commodities, Bloomberg reported.
For his part, Newsmax Finance Insider Mike Fuljenz points out that the uncertainty surrounding President Donald Trump's future in the White House could also actually provide a boost to the precious metal.
If the Trump impeachment process begins next year, we may see a replay of the 1973-74 markets in 2019-20. In 1973-74, the Dow Jones industrial average declined 45% from 1051.7 on January 11, 1973 to 577.6 on December 6, 1974. That coincided with one of the biggest bull markets in gold and rare coins, he said.
"Gold more than tripled, from under $60 to over $180, while the Rare Coin CU 3000 index rose 348% -- more than four-fold," Fuljenz recently wrote.
"There was an impeachment threat in the Reagan years, too. On March 6, 1987, Representative Henry B. Gonzales, a Democrat of Texas, introduced articles of impeachment against President Ronald Reagan regarding the Iran Contra affair. It’s not well remembered today, but there were hearings running for three months – from May 5 to August 6, 1987 – including testimony by Oliver North and others, followed by Congressional Committee meetings investigating Iran-Contra through the fall," he said.
"The impeachment threat wasn’t over until the final committee report came out in November, after a huge 36% stock market crash! At the same time, we saw the beginnings of a large bull market in rare coins. From 1986 to 1990, the Rare Coin CU 3000 Index rose 665% at a time when gold bullion and stocks were essentially flat."
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