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When Oil and Gold Trade Like This, Markets Crash

Aug 13, 2019 | Fred Abadi |

When Oil and Gold Trade Like This, Markets Crash

Slowing global growth and the potential for further tariffs mean that oil is floating near bear market levels. Gold, on the other hand, is on the rise—due to the same factors that are putting oil under pressure.

We rarely see gold rising and oil dropping at the same time, and when that happens, it foreshadows a crisis or recession, as you can see in the chart below.

In fact, only three times in history have we seen silver and gold prices rising while oil prices dropped. And all three times happened during a recession or a severe bear market. What we’re witnessing today looks a lot like the start of the sell-off in late 2018.

The surging gold-to-oil ratio, the annihilation of copper prices, the widening corporate spreads, the credit markets—all of them are screaming “Recession ahead!” On top of that, the Fed is being dovish and is considering a rate cut later this year, which, this late in the cycle, signals a bearish sentiment.

This is a clear indication that a recession is coming, and investors are going to panic when their stock portfolios crash.

But not me.

I’ve spent my career preparing for this exact type of timing, and my friends, my family, and my clients are all in on investment portfolios that will go gangbusters when the markets go bust. Would you like to get more information about protecting and growing your wealth? Then, I will gladly discuss it with you—with no obligations—if you have a few minutes to do so.

Schedule an appointment with Fred here.

About Fred Abadi

In his over 14 years in the financial industry, Fred has focused on commodities and precious metals as investment assets. He has penned several articles on topics such as the commodities markets investing in precious metals for retirement accounts. Fred has helped thousands of clients safe-guard their investments with gold and other precious metals. He has been with Gold Alliance for over two years as a leading Sr. Portfolio Manager.