Update - September 28, 2021

Time to Buy

It’s a buying opportunity… plain and simple.

Since the market hit its lows some 18 months ago, we’ve been saying the same thing. Ultra-low interest rates, drunkard-like levels of government spending and a lack of alternatives have pushed stocks – and crypto – to one record high after another.

Despite a bit of malaise of late, none of that has changed.

As you know, our Modern Asset Portfolio (MAP) hinges on the real yield of the 10-year Treasury. This is the number that matters most. When we subtract the rate of inflation from the benchmark yield, we get a sense of the true cost of money.

And while headline writers are hyping up the rise in yields… our favored metric tells us there’s a long way to go before we need to change our strategy.

As I write, the real yield on the 10-year Treasury is -0.87%.

It’s up from its nadir this year of -1.19% in early August but is well off its high of -0.56%, which we saw just six months ago.

Again, it tells us the forces that have pushed the markets to record highs remain in charge. It means we must stick to our proven, winning strategy of buying the assets most likely to benefit from oodles of free money flowing through the economy (like the trillion dollars in new spending Congress is debating as you read this).

Buyback stocks remain a big focus. As do tech stocks. And, of course, crypto.

All three offer tremendous short-term buying opportunities right now.

But there’s another asset class that’s worth buying right now. It’s a big part of our MAP, and yet few investors are watching it all that closely.

It’s gold.

The currency of currencies hasn’t gotten much attention lately. But it soon will.

Looking at the charts, we see the metal is at a key technical level. It’s sitting at a critical level of support at $1,730.

This makes sense. The last time gold dipped to this level, the real yield on the 10-year was also reaching its peak for the year.

It means that if the real yield begins to fall again, gold will zoom higher.

And, remember, there are two things that drive this equation: the 10-year Treasury, of course, and the rate of inflation.

It’s the latter that will be a boon for gold.

Fed Chief Jay Powell is on Capitol Hill today with Janet Yellen. They’re talking to Congress as they are required to do. Getting a sneak peek at Powell’s prepared comments, we see that the man in charge of the nation’s fortune is tweaking his commentary on inflation.

It’s still temporary, he says. But it will be here longer than he first thought.

He’s walking back his stance and telling the market what it has known for months.

But here’s the thing. It’s the key part. Powell and his troops are months – if not a full year or more – from doing much about inflation. The first rate hikes will likely not be until this time next year. And that’s assuming we don’t get any sudden shocks (like trouble in China) that force the Fed to do something crazy in the opposite direction.

That’s why right now looks like an ideal time to buy gold.

The timing of it all is great. I just wrapped up the latest monthly issue of Manward Letter… which focuses on a unique way to play gold. It’s quite interesting and involves a little-known $6 stock that anybody with any budget can play.

My team and I are wrapping up the final details, and you’ll see it in your inbox early next week.

We’ve been handed a great opportunity. It’s time to take advantage of it.

Be well,

Andy