Gold And The Big Four: Slam Dunk

The synergistic relationship between gold and economic growth is quite healthy, and poised to become even more healthy in 2018 – 2019. Please click here now. Double-click to enlarge this fabulous South Korean stock market ETF chart. Big name Western money managers are finally racing to move money into Asian markets, and this is great news for both gold and global stock markets. For several years I’ve recommended that the gold community slightly reduce (but not drop) their focus on gold’s Western world fear trade and increase their focus on the Eastern stock markets and the love trade for gold. South Korea’s stock market sports 50% earnings growth and a P/E ratio of just 10! Japan’s market is also red hot, and so are the markets of China and India. US markets have risen strongly, but with anemic economic growth and nosebleed valuations. Growth is vastly stronger in Asia, but without European and US money manager participation, Asian stock markets have previously languished. This situation has changed dramatically in 2017, and 2018 should see an acceleration of this new trend. The bottom line: American markets are hot but overvalued. Asian markets are red hot but not overvalued. I own ETFs (and some individual stocks) in the ‘Big Four’ Asian markets; India, China, Japan, and Korea. I urge all Western gold bugs to ‘get with the (good) times’. The fear trade for gold will never disappear, but it’s a new era, and this new era is dominated by Asia. Investors should be very comfortable owning Asian stock markets and gold…at the same time. The bottom line: America isn’t out, but Asia is in! When times are good (and they are now very good in Asia), Asians buy more gold. Exponentially more. Chinese demand reflects this fact. It’s rising again; demand is up almost 20% over 2016, and poised to rise even more strongly in 2018.

This post was published at GoldSeek on 7 November 2017.

 

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