Stocks Follow Money Printers

Sophisticated investors recognise the direct correlation between extreme monetary policy (i.e. money printing and rate suppression) and the simultaneous rise in stock and bond valuations.

The following correlation of the S&P’s historic rise on the back of extreme (and omni-present) money printing and interest rate suppression policies make this artificial support objectively obvious.

Market Volatility Ahead

Such central-bank-supported market highs are not only misleading and unsustainable, they ultimately lead to increased price swings and hence market volatility against which precious metals have consistently served as a reliable buffer in the past as well as present.

Bonds: No Longer a “Safe Haven”

Traditionally, sovereign and corporate bonds were perceived as a counter-force and/or safe-haven asset to offset extreme stock market volatility. Unfortunately, with central banks repressing rates and buying bonds with printed money, the bond market has changed.

Credit markets across the globe have become grossly over-bought (and hence over-valued), thereby sending/compressing bond yields to the basement of history and thus rendering bond assets far riskier than their traditional profile as a volatility buffer.