As the doom and gloom merchants continue to shout Bring out your dead…bring out your dead I remember the old Monty Python movie The Holy Grail, and the following scene,
During the Wuhan Virus epidemic, I have been reporting almost weekly that the virus is not going to affect the USofA other than economically. Will people get sick? Yes, they will. Heck the CDC has reported that there has been between 20,000 to 52,000 deaths from October 1, 2019 to February 29, 2020 here. In comparison, there is only 22-deaths at this writing due to the nCoV-2019 virus here. And most of those folks had underlying medical issues. Let’s put things in perspective folks.
I have predicted that precious metals will rise as people move their money from the stock market and other commodities to a holding bucket; Consequently, gold is up to $1,674- an ounce at this writing which is a rise of ~$100- in the past 30-days. Silver is down about $1- during the same period to $17.17 an ounce.
The stock market is off its high of 29,277 30-day’s ago to today at 24,065, a 18% fall. Let’s look at why.
The initial decline of the stock market and crude prices along with the rise of the gold price is certainly due in a large part to the Wuhan Virus – Maybe as much as 50%. The USofA along with many global markets have way too many eggs in the China basket and it will affect all of us due to JIT (Just In Time – Inventory/Manufacturing). With China being off normal manufacturing levels by 50%, they do not need the same levels of fuel to run their plants. It’s the old Supply and Demand phenomenon. Oil and other fuels will predictably drop. I have already seen it at my local gas stations where prices have dropped 14¢ a gallon in the last two weeks.
The next chunk of why we are seeing the jittery market is correction. We all know that the market was over valued and what we are seeing is a stiff correction in combination to the virus. It was bound to happen, and I am glad it is happening now rather than in October of this year. One month or so before the Presidential election in November.
The last item that we all need to be aware of is; Saudi Arabia has decided to stop controlling the output of their oilfields – They are opening the spigots sort to speak. Again, supply and demand determine the price and availability. As the supply increases even more, crude is going to drop in price. Crude was $54- a barrel 30-days ago and today at this writing it is $41- a barrel. Why are the Saudis doing this you might ask? Well because the world’s economy is screwy, and they figure what a great time to stick it to the Russians and Iranians. Remember, the Iranians are fighting the Saudis via a proxy war in Yemen while the Russians have their hands under the Iranians saroual’s.
Let’s all remember that the Wuhan Virus along with other winter nasties will burn itself out as we move quickly into spring weather patterns. Once that happens hang on as the market is going to explode and gold will most likely drop down to the low $1,600’s. Oil will rise again but not in time for you to not see welcoming price drops at the petrol pumps just in time for summer travel.
With all of that written, you still need to take stock of your 3B’s and make smart additions in case you find yourself laid-off for a short period while China regroups. I still am recommending that you have one month of expenses on hand in cash just in case. Do not worry about over buying to much on certain items as you will then be ahead of the curve when the nasties start up again in October of 2020. And yes folks with a new one called the Wuhan Flu.
Freedom Through Self-Reliance®