Stocks Crater, And Gold Silver Follow Suit. What The...?

Here's my 2 cents:

As stock market participants got an inkling about how bad Covid might be, they sold a LOT creating the first downdraft.  Ironically gold immediately went up in the opposite direction to 1700 spot.  I guess this was a knee jerk reaction, flight to safety, fear trade, who knows.

But it was exactly the wrong play, at least initially. 
Rather quickly it began to dawn on nearly EVERYONE, that this was probably the single most deflationary event to ever hit the entire world.  People dying by the 100s of thousands maybe even millions (AND in particular older people), demand for anything but food basically grinding to a halt. It didn't take long for traders to figure that out and they sold gold too, all the way down to around 1460 spot. 
 
As the stock market continued to tank then came the talk of stimulus, bailouts, cash payments to just about everybody, i.e. the flip side, the biggest inflationary event in world history.  Here in the states they are just going to send money to peoples bank accounts.  That means the gold trade is on again in a big way.  Gold is right back up to spot 1726 today and it sure seems strong.  For the meanwhile, it sees endless money printing.

As to the high premium for gold coins over spot, apparently this is due to huge demand and all the major coin dealers as well as mints being caught flatfooted. Apparently they just don't keep tons of this stuff just lying around.

LCS are all closed so ebay seems like the only place you can buy anything and 1 oz gold coins routinely get $200 over spot premiums.

And to finish the previous thought.... (based on ones portfolio & individual risk tolerance) having a 5-10% position in physical precious metals or an investment in a market trading vehicle, might be a prudent decision if you listen to people like Dan Niles-AlphaOne Capital and Jeffery Gundlach-Doubleline Capitol. They both make good/logical points for the market retesting or even putting in lower lows than we saw in March. Then, when we finally get through this pandemic, take profits and reinvest in other beaten down sectors. Just my opinionated .02, take it fwiw.

The Fed & Q.E. Infinity band-aid policies on a mortal wound is only a temporary fix. We already went off the fiscal cliff some time ago and now this current pandemic environment only exacerbates the issue.... unfortunately, the hole keeps getting deeper. The real question, when is it finally going to be realized? That's my base-case thesis for having a small % exposure to precious metals physical a/or investment vehicle. I truly believe at some point in the not so distant future, we'll see a real divergence between the $GLD & DJIA/SPY/QQQ, but to reiterate, its all my opinion.

Bret, who said it was borrowed?

They're Just printing electronically creating it.

Just think no worry about running out of other people's money.

Ever.

Think about it.

@ Bret - all three options have been going on for years.

@Bret, to add to your 3rd scenario.... the abandonment of fiat currency and adoption of crypotcurrency. As Boomers & Gen X'ers continue to disappear, I believe the younger generations will be most accepting of the crypto payment concept. Its very much in its infancy, but we're already witnessing it in.... BTC = as a storage of wealth, XRP/Ripple = instantaneous transfer of monies and FedCoin, just to name a few. $1.3 trillion spending bills to avoid govt shutdowns, $2+ trillion stimulus package and its easy to assume even more in the coming months/years ahead. The national deficit continues to grow & its never going to be repaid. I see the eventuality of the USD, to that of a heavily diluted, defunct stock.... it becomes outdated, worthless, abandoned and ultimately delisted, in favor of something new. Some may balk at the notion but I do think it is inevitable.

@ coin rejector- Cryptos seems to be basically incompatible with gold people. I don't see how a gold person, don't trust the bank, hold the physical in my own hands type person, can really warm up to something that just sorta floats around in the cloud.

@Brett said "At some point it's not going to be possible for the .gov to pay back all of the money that's being borrowed."

Look to Japan to see how governments are attempting to tackle their debt problems. At least this is my theory. You see this happening with everyday consumer loans also. Used to be an auto loan was what 3 years? Now they are 6 and even 7 years. Mortgages? Typically 30 right? Now there are even 50 year loans. Typical US Treasury Bond maximum was 30 years. I think Japan has 50 year bonds if not 100 year bonds already.

If you are betting on some big default, just watch Japan. They have the highest debt to GDP of any country. I've been to Japan though and my opinion is they will never have a problem.