Can gold and silver protect you from a stock market crash? // Investing hoard physical commodities, gold and silver investing, gold investing 2017, silver investing 2017, gold hedge, gold hedging explained, silver hedge, silver shortage 2017, investing in gold and silver, investing in gold, investing in silver, investing in gold bars, investing in gold coins, investing in silver bars, investing in silver coins, gold market crash, silver market crash, gold stock market, silver stock market, hoarding gold, hoarding silver, hoarding gold and silver david moadel
welcome to looking at the markets with
David Modell I wanted to look at whether
holding on to gold or silver is a good
way to protect yourself against a stock
market crash so let's look at a website
called macro trends net wanted to give
them credit and we're going to look at
how gold and silver first we're going to
look at gold and how it performed during
several economic recessions which would
also be market crash in stock market
crashes so the gray part here is a
recession and as we can see this is the
early 1990s recession and this is the
gold price and it pretty much ended
where it started during that recession
so it held steady it went up but then
frustratingly came came back down but at
least it didn't lose money so it
performed pretty well there let's take a
look at the next recession after that
which would be the early 2000s
and as we can see gold went up during
that it went up during the recession of
the early 2000s so that's pretty good i
would say was it was a pretty good hedge
pretty good protection against that
market crash there how about the most
recent recession in the during the late
2000s well here the picture is not as
clear it's pretty choppy here up down up
and it did go up it ended somewhat
higher than it started but it was
probably not so easy to just ride out
this ride out this downturn here this
pullback I mean we know historically in
hind sight that it came right back up
but people didn't know it at the time it
probably felt like it was going to keep
going down all right so let's take a
look also at silver prices
and this is macro trends dotnet here we
go silver prices hundred year historical
chart we're going to let that load up
and we're going to look at the same
three market crashes or recessions
and we'll see how silver did during that
time we're going to make it not
inflation adjusted and we're going to
start again with the recession from
we'll start with the early 1990s and
we'll study that period
let's see how it did
there we go ah well let's look at silver
during that early 1990s recession we can
see silver prices going down sharply not
such a great hedge not great protection
against a market crash there or
recession let's look at the dot-com
dot-com bust of the early 2000s let's
see how it performed then
and we can already see that it that it's
it was quite choppy
look at that up down up down not so easy
to ride that out it looks like it may
have actually ended lower than it
started a little bit somewhat but not
not so steady it might not have been
very easy emotionally to write out via
this this up and down the chops here
perhaps not such a perfect edge right
there against a stock market crash and
then finally we're going to look at the
Great Recession the late 2000s here and
a not this is silver and not such a
perfect market hedge although it did
land it did and just about where it
started so if you had held on but it's
not so easy to hold on to such a
precipitous drop from in almost twenty
dollars an ounce to less than half of
that
about nine dollars per ounce it's easy
in hindsight to say oh well I would have
just held on and it would have been fine
but when it's falling so sharply so fast
that's not such a great market hedge
it's it's not so simple just to ride
that out a lot of people would panic or
lose patience and sell for a pretty
sizable loss there so looking it over it
looks like gold at least for the past
three recessions gold seems to have been
a better hedge or protection against a
market crash than silver perhaps and I'm
not telling you what to buy or what to
do what not to do but gold does seem a
little better at least historically for
the past three recessions but neither
one was a perfect market hedge they were
both choppy they both had their ups and
downs it's not so easy to write out
those downs especially when it takes
months or years to work itself out and
especially when it goes down a lot so if
you're going gold or silver with the
only purpose being to write out a
potential stock market crash or
recession it's not a perfect catch
you may want to consider other hedging
hedging mechanisms hedging strategies
such as holding cash or using put
options or using small position sizes
with your trades things like that there
are things you can do besides stacking a
lot of you know holding on to a lot of
gold or silver there's nothing wrong
with that but don't expect it to be a
perfect market hedge there may be better
the way better ways that you may want to
consider alright so if this was helpful
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I'll talk to you again soon
you