“Sell shares, buy gold”

“Sell shares, buy gold”

Welcome back to what is shaping up to be a very very interesting year for financial markets and precious metals.  To set the scene for 2016 last week’s Chinese sharemarket falls saw the worst start to a new year in the all important S&P500’s history, down 6% in 5 days, and Australia is set to continue its worst start ever today with more big falls predicted.  Of course the rest of the world followed suit too.  Gold and silver, as you probably know, did the opposite and rallied as the market started looking for a safe haven.

Before this even played out financial giant UBS came out in the new year with a very clear warning to investors to sell shares and buy gold in 2016.  Their analysts walked us through a number of charts and facts that are screaming an imminent financial crash.  They also see gold bottoming and starting its next “multi-year” bull run.

Below is but one chart and they note “the S&P-500 now trades in its 4th longest and 5th strongest bull market since 1900.”

Critically too is they debunk the US Presidential Election year bull market myth (which this author had been concerned about this year for gold).  Most believe that sharemarkets always rally in a US Presidential year (the powers that be keeping things looking good for the incumbent).  However this is most certainly not the case when it is the 8 year of a presidential term, as is the case with this year and Obama.  The 100 year average for 8th term elections is actually negative!  So in a market largely inflated by years of money printing and zero interest rates, not even political intervention has its ‘back’ this year.

We promise to keep our daily news short so we will stop here but the message is abundantly clear for 2016.  Just last week legendary billionaire investment manager George Soros had this to say (Soros is one of the greatest traders of all time. From 1969 to 2011, he generated an average annual return of 20%...nearly double the S&P’s average return of 11%) (ex Bloomberg):

‘China is struggling to find a new growth model and its currency devaluation is transferring problems to the rest of the world…. A return to positive interest rates is a challenge for the developing world, he said, adding that the current environment has similarities to 2008.

‘“China has a major adjustment problem,” Soros said. “I would say it amounts to a crisis. When I look at the financial markets there is a serious challenge which reminds me of the crisis we had in 2008.”’

Tomorrow we will pass on one of the best explanations of what is happening in China.  Until then…