This is a period of time when you should be adding to your coin and precious metals holdings. And if you are thinking of selling your precious metals coins right now, my considered opinion is for you to hold off for a bit.
With the Democrat led House of Representatives finally taking the first step to file articles of impeachment against President Trump, we need to look at the last two times a Democratic Congress filed articles of impeachment against a Republican president.
The first time was in 1974, after President Richard M. Nixon was re-elected in a landslide, but faced a 255-180 Democratic majority in the House. When the details of the June 1972 Watergate break-in and the subsequent cover-up began to surface, Nixon’s enemies were given a platform for impeachment.
What happened next? Stocks collapsed, and gold soared. The Dow fell from 1,051.70 on January 11, 1973 to 577.60 on December 6, 1974, down 45% in just under two years. That coincided with one of the biggest bull markets in gold and rare coins. Gold tripled, from barely $60 to nearly $190.
The bulk of the stock market decline came in the third quarter of 1974, during the time leading up to President Nixon’s resignation and then President Ford’s pardoning of the disgraced past president. Here are three specific dates, one month apart, showing how fast the Dow declined after the President resigned:
In this inflationary environment, bonds were called “certificates of guaranteed loss;” cash was losing ground; and stocks were losing 45% in nominal terms and falling twice as fast in real (after-inflation) terms. At the same time, the Fed was raising interest rates to new postwar highs, raising rates nine times in 15 months, from 4.5% to 8.0%. Gold was one of the only investments going up, but it was illegal for Americans to own gold until the final days of 1974, when that 41-year-old law was finally repealed.
As gold kept rising, many U.S. investors turned to numismatic or collectible coins. From 1972 to 1974, many rare coins rose far more than gold or silver bullion alone. For instance, the Rare Coin CU 3000 index rose 348% then, over four-fold.
In 1987, there was a less-successful threat of impeachment against President Ronald Reagan. On March 6, 1987, Representative Henry B. Gonzales (D-Texas) introduced articles of impeachment against President Reagan regarding the Iran Contra affair. It’s not well remembered today, but there were hearings running 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. The impeachment threat wasn’t over until the final committee report came out in November, after a huge 36% stock market crash and a small rise in gold.
At the same time, we saw the beginnings of a huge bull market in rare coins. From 1986 to 1990, the Rare Coin CU 3000 Index rose 665% at a time when stocks were essentially flat.
The bottom line is that it has paid to diversify when impeachment threats are in the air.
The House will not likely succeed in removing President Trump from office. This will more likely resemble the failed Reagan impeachment effort than the successful Nixon attack.
But as with many past episodes of political uncertainty and wild stock market gyrations, it often pays to take some stock market profits and invest in gold and silver bullion and coins.
Mike Fuljenz is a member of the Newsmax Finance Brain Trust. He is also the editor of the NLG award winning Michael Fuljenz Metals Market Weekly Report. Discover more by Clicking Here Now.
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