We're Buying Bonds & Gold

The war drums are beating…

And the investing implications couldn’t be bigger.

As we all know, a major conflict has broken out in the Middle East.

And no one knows how this will all shake out.

Unfortunately, all signs point to things getting worse before they get better.

This isn’t a situation that investors or traders can afford to ignore.

If this conflict escalates, expect volatility to come back in a big way. You may even want to start preparing for a full-blown market crash.

In short, this isn’t the time to be complacent. The good news is that there are simple ways to shield your wealth.

We’ll share two of our favorite strategies in a second.

But we want to first welcome you to The Discount Weekly. Each week, we dive head first into the biggest issues facing traders and investors… and explain how they impact your portfolios.

Lately, our focus has been the stock market. But we’re going to turn our attention to bonds and gold today.

Throughout history, bonds and gold have been considered “safe haven” assets. They’ve performed well during times of widespread turmoil…

And that makes them interesting bets during today’s uncertain times.

So, let’s take a closer look at what these two important markets are saying right now, starting with bonds…

Bonds Have Been Taking a Historic Beating

If you’ve been paying attention to markets lately, you know interest rates have been soaring.

Consider the U.S. 10-Year Treasury yield. It’s nearly tripled over the past two years, breaking out to its highest level in a year a few weeks ago.

This is a huge deal.

Interest rates are the price of money. When they increase, everything from buying a house to financing a new business gets more expensive.

That’s why so many strategists are worried about the pace of rising interest rates after not only a historically low interest rate period in 2020-2021, but a historically low interest rate period that lasted several DECADES since the 1980’s.

Neither the U.S. economy nor the global economy are built for this environment.

Bonds are also the world’s biggest asset class.

The global bond market is estimated to be worth around $133 trillion! It’s far bigger than the global stock market, and orders of magnitude bigger than the crypto market.

In other words, the entire global economy could be in serious trouble if the bond market continues to crack.

That said, bonds may be approaching a major bottom.

To understand why, take a look at this chart. It shows the performance of the iShares 20+ Year Treasury Bond ETF (TLT) since it was launched in 2002.

The TLT ETF invests in long-term Treasuries. Many investors use it as a benchmark to assess how bonds as a whole are performing.

Below, we can see that TLT has been under immense pressure lately. It has fallen more than 53% since March 2020.

This is a truly historic selloff. By many accounts, this is the worst rout for Treasuries ever!

The “good news” is that bonds are likely close to a bottom. We say this because TLT has pulled back into a key level of support.

In short, we see more opportunity in bonds, than risk. At some point in the near future, bonds could reverse course as investors run for shelter.

If that happens, bonds could be an excellent hedge for your portfolio. But it’s simply too early to make any sort of bottom call. However, we’ll be sure to let you know when that buying opportunity presents itself.

To see exactly how we’re playing this opportunity in TLT, be sure to join us in our FREE Telegram channel here today.

Time for Gold to Shine Again?

We’re also closely monitoring gold.

Last week, gold woke up in a big way.

On Friday, the SPDR Gold Shares ETF (GLD), which tracks the price of gold, jumped 3.2% on its heaviest volume in months.

It closed the week up 5.4%, and is now trading back above its 50-day moving.

It’s far too early to tell if this is the beginning of a much larger move for gold, but we certainly wouldn’t be surprised if that transpires.

As we’ve explained before, gold is one of the world’s most trusted safe haven assets.

For many centuries, investors have taken shelter in gold when they’re nervous about the economy… financial system… and even their own paper currencies.

And there’s a lot of fear in the air right now.

We also like what we’re seeing in gold when we “zoom out.” You can see what we mean below. Here we’re looking at a monthly chart of gold.

We can see that it’s been building out a massive cup and handle formation. It’s likely only a matter of time before this pattern breaks out to the upside.

Global uncertainty isn’t the only major tailwind working in gold’s favor currently.

The U.S. government also continues to spend money like it’s going out style.

Check out this chart. It shows the explosive increase in the national debt over the past century or so.

It’s gone parabolic. This, of course, happened because the U.S. government has gone on a drunken spending binge.

Sadly, this trend is only going to accelerate.

Take a look at this chart. This one includes projections from the Congressional Budget Office (CBO).

We can see that the total U.S. public debt outstanding is projected to rise from about $35 more than $50 trillion by 2033.

This explosive surge in U.S. debt is highly inflationary. During environments like this, you want to own hard assets like gold.

So, it shouldn’t come as a surprise that gold’s been outperforming Treasuries in recent years.

In fact, GLD recently broke out of a massive long-term base versus TLT. This kind of move suggests that gold will continue to outperform Treasuries for years to come.

That’s part of the reason why we like gold even more than Treasuries going forward.

Of course, it’s far too early to go “all-in” on gold. But we like what we’re seeing, and believe the current conditions make right now a perfect time to start accumulating long-term gold positions.

Join us in our FREE Telegram Channel. We update our followers in real-time, with common sense analysis on the trades we are taking, currently in, and keeping our eye on. Common sense analysis that anyone, from beginner-to-advanced, can easily understand and take advantage of.

P.S. - If you are interested in LIVE Trading, Monday - Friday mornings, we have a LIVE Day Trading Room with over 50+ professionals, intermediates and beginners. Give it a test drive 7 Days for $7 here.

See You Next Sunday!