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NEW YORK, NY – Conversing in person with the revered stock market and gold authority Stephen Leeb, or reading the latest of his nine best-selling books, China’s Rise And The New Age of Gold (CRAG), is an equally informative experience. Or, so I discerned from the start and throughout the 60-minute interview I conducted with him (following Covid-19 health safety guidelines) in my office last week.
“Gold over the past two decades has been the best investment, far surpassing stocks and bonds… During the 2000 – 2019 time period, gold has outperformed the S&P by 200 percentage points and outperformed bonds by 250 percentage points. And this year alone, since the market’s peak in January, gold has consistently outperformed S&P 500,” noted Leeb, restating three of among the many interesting facts I had already learned from reading his lucid, informative, at time humorous and perhaps (time will tell) prescient 259- page tome.
However, just as he bemoans in the book, Leeb who – in addition to his success as an author has become a sought after and frequent guest on most of the top news and business networks, serves as an advisor to several major corporations and is the editor of his own award-winning publication, The Complete Investor – contended that the leading investment firms and financial advisors have unwisely steered their clients away from the gold market, and instead have directed them to invest in the conventional markets.
“Rather than recommending gold, the major investment houses and investment advisors have for the past 20 years persuaded their clients to build their portfolios around a relatively safe diversified mix of stocks and bonds, in what is referred to in the industry as the “construction process,’’ said Leeb.
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While acknowledging the reliability of the common variables, financial professionals typically consider when planning their client’s personal portfolio, which, Leeb stated, include the investor’s willingness and ability to take risks, the age range and economic status of his/her nuclear family and the anticipated need (or lack of need) of a healthy retirement income, Leeb asserted that such factors argue in favor, rather than against investing in gold.
“Adjusting the allocations among stocks and bonds to an individual’s unique personal financial condition is a standard and correct strategy. But that strategy as I write [in CRAG], makes gold- a proven profitable, safe and reliable asset- a perfect fit into the diversified holdings of practically any investor,” contended Leeb.
Leeb further argued that the economic power of China, the rise in the value of commodities in Asia and the Covid-19 global pandemic have significantly increased the speculative value of gold.
Discussing the economic power of China first, Leeb stated, “As I write [in China’s Rise and the New Age of Gold: How Investors Can Profit from a Changing World], China’s financial planning has worked so well over the past 20 years that it now has the world’s largest economy and has become the biggest international trader on the planet. China also has the greatest amount of gold reserves in the world, which as I foresee, it will eventually use to back up a new reserve currency. When that occurs, the value of gold will skyrocket.”
Leeb next elaborated on how the Asian commodity market has served to increase the value of gold. Explaining that Asia’s 49 nations can be divided into developed countries, which include India, Japan, South Korea and China itself and underdeveloped countries which include, Cambodia, Laos, Vietnam and Indonesia, Leeb continued, “The economies of both the developed and underdeveloped countries in Asia which, by the way, contains 60% of the world’s population, are growing by leaps and bounds.”
“As a result,” Leeb added, “they are consuming increasing quantities of commodities such as coal, gas and oil to fuel these growing economies. How this affects the price of gold is easy to understand: It has been a long accepted economic rule that the higher the price of all other commodities, the higher will be the price of gold.”
Lastly, Leeb discussed the impact that Covid-19 has had both on the world’s economy and the value of gold, even while noting that the crisis did not begin until after he had submitted the original transcript to his publisher, Mc Graw Hill, back in February 2020. “Covid-19 struck the world in early March, shortly after I had sent the manuscript off to the publisher,” he recalled. “So I decided the best way to go was to add my analysis of how the pandemic might bear on the world and how it might impact upon the price of gold was to add it to the preface… My conclusion, as you will see there, is that the pandemic, for a series of reasons, will prove to be a major factor contributing to the future bull market for gold.’’
Leeb- whose past correct forecasts include the upsurge of the bull market in the 1980’s, the collapse of the internet bubble in the early 2000’s and rise of China as a financial powerhouse in the 2010’s- devotes the major portions of the first 19 of GRAG’s 23 chapters further detailing and analyzing the effects that global events, international currency fluctuations, market forces and economic trends will have on what he foresees as the future meteoric rise in the value of gold.
However, it was the book’s final four chapters, containing a guide on how to navigate through the process of purchasing gold, which Leeb conjectured that his readers might find to be the most important of all.
“I expected that the readers who the book motivated to consider investing in gold would find it essential to learn the ins and outs and the do’s and don’ts involved in purchasing gold for the first time,” said Leeb. “We do just that in the final four chapters, which provide actionable, research driven advice on how to get started in and eventually greatly profit from investing in the gold market.”
As readers of my column might recall, I interviewed Leeb by telephone at the end of last April for a column which appeared on these pages about a week later. In the column titled, Stephen Leeb: Renowned Financial Authority Talks About The Stock Market, Gold and the Current Financial Crisis Caused by the Coronavirus, I quoted Leeb as follows: “Gold over the next generation has the potential to reach many times its current value as a result of the world’s needing essential backup to all of the international currencies.”
There is short range data that indicates that Leeb’s prediction that day was on the mark: On May 11th, 2020 just 2 days after my column came to print, gold closed at 1697.2 an ounce; and, on November 13th just over seven months to the day later, gold closed at 1889.2, an incredible increase of approximately 10%.
Still, in CRAG, Leeb makes even a bolder prediction than he made this past spring, which he unhesitatingly reiterated to me: “Just as I detail in the book, due to many factors, the price of gold will, within just one generation, increase from its current range of slightly under $2,000 an ounce to $20,000 an ounce, a ten-fold increase,” prognosticated Leeb.
It is a prognostication that financial firms and investment advisors might be recommended to carefully evaluate when planning their clients’ financial future.