This Bull Market Is Here to Stay April 24, 2016

Steve McDonald: Hi, everybody, I’m Steve McDonald. This is your Market Wake-Up Call. Our guest this week is Rich Checkan. He is with Asset Strategies International - by the way, one of The Oxford Club’s oldest friends and Pillar One Advisors. He’s here to talk about gold, coins, and what he calls tangibles and rare tangibles. Welcome back, Rich.  Rich Checkan: Good to be here, Steve. Steve McDonald: It’s nice to have you back. Okay, gold has been flying out of the multiyear slump that it had been in. What’s driving it, and are there any signs that this is going to last? I’m hearing plus and minus on this. Rich Checkan: Understood. Well, the short answer is more buyers than sellers, clearly. But there’s obviously more to it than that. Since mid-December last year, we were in about six- to seven-year lows for both gold and silver. And by the end of the first quarter, we had entered into, technically, by definition, a bull market in both - certainly in gold, as a result of a 20% increase from that time in December. And a lot of folks were sitting on the sidelines, the investors, because they saw this over the previous two, three years. The difference this year and the reason the retail investor is in this market now over the past month is we’ve gotten confirmations from two things. One, the gold-silver ratio, the number of ounces of silver it takes to buy an ounce of gold, hit a magic number of 80. It actually went up to about 84 and has since come back down. That’s usually an indicator of the bottom of the market that corroborates the technical bull. The other big one is, you know, as we sit here today, the HUI, which is basically the broad index for mining shares, has doubled since January. So the securities in mining shares have basically led the rally in gold. That’s something that was not there the past two, three years. I’d love to see confirmation above 1,306 on gold. But right now, it’s looking like we’re in a bull market that’s here to stay. Steve McDonald: Yeah, I know I’ve been watching Freeport-McMoRan, BHP, Hecla, probably a dozen mining companies. And they’ve literally been going up 5%, 7%, 8% a day for months now. Rich Checkan: Best-performing security sector this year. Steve McDonald: Yeah, it’s amazing. Now, for some time, I’ve been reading in The Wall Street Journal - in the Penta section of the Journal - about a big shift among the rich to the very rich in the U.S. from stocks and bonds - to some degree, not all, but to some degree - to what you call tangibles, things you can hold in your hand: gold, silver, coins, art, cars. Are you seeing this shift? Or is this just marketing? Rich Checkan: We’re absolutely seeing this shift. It’s definitely already in place with the uber-rich, if you will. We’re also seeing it trickle down now to the more average investors. Because folks like us and others have found ways to bring the average investor into the collectibles market, if you will, because they’re able to take advantage of noncorrelation, lack of volatility, proven performance, riding on the backs of collectors, as opposed to an investor-driven market or investor-driven assets. And we’re seeing that ourselves. We have a U.S. early gold rare coin program; it’s been in place for about five, six years now in earnest. And if you look at the coins that we have physically put our clients into, for instance, they’re up about 60% over the past 10 years. Which have been a good 10 years for stocks for the most part and really not a good 10 years for tangibles: rare coins, rare art, things of this nature. Steve McDonald: Now one of the things that plays on this, I know, are currencies. And you watch the international scene as much as I do. In fact, I think between you and Michael, you’ve been watching it longer than I have. What, 34 years now in the business? Rich Checkan: Yes, yes. Steve McDonald: You don’t look that old. Rich Checkan: Well, I’ve been in the business 20 years. But Michael and Glen, his partner, started this business back in ’82. Steve McDonald: Right, I remember. Are the international jitters driving more people to hard assets? I mean, the run the yen made against the dollar just last week is a perfect example of what I’m referring to. Rich Checkan: You’re right on target. You know, the yen is up almost 11% thus far this year versus the dollar. And if you think about it, the dollar, the yen, gold, are typically where safe haven flows go to in times of uncertainty. And I think there are really two drivers. One is kind of in the backseat that may materialize later, and I think that’s this concern over a movement to a cashless society. And of course, if we go cashless, my thought is the new cash is going to be gold. But that’s on the back burner. The front burner is zero interest rate policy and, more worrisome, negative interest rate policy. So, ZIRP and NIRP. I think those are on everyone’s minds. We’re already seeing the zero or negative interest rates in Europe and Asia, and Janet Yellen says it’s on the table in the U.S. Now that’s not going to happen tomorrow. But the fact that they’re even thinking about it is making people look from an opportunity cost standpoint to other assets where their money will be treated better. Steve McDonald: And you like gold here, I take it? Rich Checkan: There’s no question. Like I said, I would love to see a confirmation above 1,306 on gold. But what we didn’t have in previous years are confirmations from the gold-silver ratio and the mining stocks leading the gold price. And that’s very encouraging. I think we’re going to be moving a little bit here. Steve McDonald: Well, gold - the alternative currency is what I call it - looks to be back. And if history’s our guide, it could be in for another big, big run. Rich, I can see why you’ve been one of our favorite Pillar One Advisors for so many years. And for our Members listening, you get a special discount with Rich and Asset Strategies if you deal with them, because they are part of our Pillar One Advisors. Thanks again so much for being with us. Rich Checkan: Thank you, Steve. Always my pleasure. Steve McDonald: It’s my pleasure. And for everybody here at the Market Wake-Up Call, I’m Steve McDonald. Thanks so much for being a part of this. I’ll see you next week. [End of Audio]