Frank Holmes on Bloomberg March 2020

If anyone has the right to say “I told you so,” it’s Bill Gates.

Two years ago, the co-founder, former CEO and now former board member of Microsoft urged governments to step up their preparedness in the event of a modern global pandemic. Such an event, Gates warned, could conceivably be more dangerous than any other threat facing humanity today, including nuclear proliferation, due mainly to the fact that we’ve become so interconnected.

Because new vaccines take time to develop and deploy, the U.S. in particular needed to invest in “antiviral drugs and antibody therapies that can be stockpiled or rapidly manufactured to stop the spread of pandemic diseases or treat people who have been exposed,” Gates said in a speech at the time.

And in a 2018 interview with STAT, he said he found it “strange… that the world isn’t doing more” to brace itself for a potential pandemic.

“We think the idea of spending what would be a tiny part of the budget to be ready for a pandemic makes sense,” he added.

coronavirus continues to spread globally
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The 10 Percent Golden Rule Remains Prudent

This last comment reminds me why it’s so important to allocate 10 percent of your portfolio in gold and gold mining stocks. It “makes sense” to be ready for a market crash such as the one we’re seeing now as a result of the spread of COVID-19, which the World Health Organization (WHO) just this week declared a pandemic and, today, President Donald Trump declared a national emergency.

Gold bullion went negative for the year as of Friday, as investors liquidated their holdings to ride out the volatility. And although they haven’t sold off as deeply as the rest of the market, gold mining stocks look cheap now, meaning it may be time to consider adding to your exposure.

gold and gold mining stocks have outperformed the market so far
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As of Friday, gold prices were up about 3.5 percent for the three-month period and up 18 percent from a year earlier. What this means is that we could see very attraction revenue and cash flow from gold mining stocks this quarter.

The yellow metal could also continue to benefit with additional monetary accommodation. Yesterday the Federal Reserve announced as much as $1.5 trillion in capital injections to calm liquidity issues. How much extra liquidity will be needed to calm markets before all is said and done? Five trillion dollars? Ten trillion? I’ve discussed the relationship between excessive money printing and the price of gold before, and suggested it could easily surge to $10,000 an ounce, especially with government bonds around the world still offering negative yields.

Silver Coins Sell Out

Meanwhile, 2020 America Silver Eagle coins temporarily sold out, the U.S. Mint announced yesterday.

“Our rate of sale in just the first part of March exceeds 300 percent of what was sold last month,” the Mint said in a press release.

We’ve long known that silver has antibacterial and antiviral properties, which may have prompted at least some of the heavy buying. Having said that, it hasn’t been proven that the white metal is effective in preventing or “curing” the coronavirus, and in fact a couple of public figures—radio host Alex Jones and televangelist Jim Bakker—are currently being investigated by state attorneys general for claiming as much.

Despite investor demand, silver prices have tumbled along with other precious metals that have industrial applications, palladium included. As a result, the gold/silver ratio, which tells you how many ounces of silver it takes to buy one ounce of gold, rose to its highest level on record this week. As of March 8, the ratio was nearly 103, beating the previous record of 101.8 in February 1991.

gold/silver ratio hit an all-time high
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