12 Feb US Stock Funds Suffer $23.9 Billion Outflow
In the last week the US Stock Funds had a $23.9 billion outflow as investors are starting to withdraw their money.
The question that I have been asking for the last year, …. where will the money go once the stock markets go bad…. is now starting to emerge. Investors are moving their money into cash. They are doing this in anticipation of the stock markets making a comeback. What they do not realize is this is only the beginning. We can expect the Dow Jones to drop at least another 10,000 points before the balance between value and pricing is reset. Cash money earns very low interest and are subject to currency depreciation. It will therefore not be long before investors will have to move into other assets which will perform better than cash.
That asset class will be physical gold and silver bullion!
The gold silver ratio has quietly moved up to 80. This means you have to buy 80 ounces of silver to match an ounce of gold. This ratio should be below 50 historically. Either gold has to drop or silver has to increase in price drastically. My money is on silver increasing going forward. I have previously mentioned the JPMorgan silver stash and now billionaire investor, Ray Dalio, in a matter of only two quarters, has accumulated 3.894 million shares of GLD, which are worth about $473 million today and 11.3 million IAU shares worth $140 million. Put together Bridgewater is betting $613 million of their client’s money on gold. Mr Dalio has a conservative outlook that gold will reach $1,556 by the end of 2018.
For South African investors the current strong rand offers a unique opportunity to accumulate physical gold bullion at the best prices we have seen in quite a while.