Will History Repeat Itself In 2020?

History Will Repeat!

Mankind tends to repeat the same mistakes over and over in time. Often we don’t learn from our past mistakes in order to break the vicious cycles.  In this article, we compare the current deep recession triggered by the Covid-19 pandemic with the 1929 Great Depression with respect to two asset classes:  Dow versus Gold mining company (HM).

Very few of us lived through that 1929 difficult period a century ago. Nevertheless there are eerie similarities between that time period and ours now.

Eerie Similarity to 1929 Great Depression

The following two charts showed how our current two assets will evolve as in 1929.

Basically, the Dow index will slowly decline while the Gold mining company (HM) will rise in value.  We have put equivalent dates in the charts.

Chart 1 – Similarity of Today’s Deep Recession to 1929 Great Depression

The second chart showed the collapse of the Dow peak now and then more clearly.  We recommend the reader to watch the YouTube video, where one can learn a lot from history.

Chart 2 – Slow Bursting of Huge DOW Bubble

Two Corrective Periods for the Markets

If history repeats itself, the markets will evolve in two periods:

• Bubble Bursting Period (A) – despite unprecedented printing of paper currency by all major central banks to fight the equity market collapse, the bubbles are bursting everywhere.  This is a similar situation in 1929. This painful period will last 3-4 years!
• The Great Monetary Reset Period (B) – this period will last only 1-2 years, when the paper currencies and the world governments lose faith by their citizens.  This will trigger a new monetary reset, where gold will play a major role, as gold has for thousands of years.  The gold which is a constraint to unlimited government printing will be set to equal to paper monetary base. The end results will lead to a gold price ranging from $10,000/oz to $35,000/oz.  The big beneficiary will be owners of physical goal and holders of precious metal mining companies.

Chart 3 – Bubble Bursting & Monetary Reset Periods

Summary

In nature there are cycles, for instance, day and night, spring and winter, sowing and harvesting. The bible tells us about the creation process.  However the bible also mentions the viscous cycles of human behavior and misdeeds.  We often do not learn from our mistakes.  The wonderful thing is there is light at the other end of the tunnel.  When the current difficult time passes, we will face joy and peace.

We are not certified or qualified financial advisors.  Please consult your certified financial advisors for actual trading and investing.

********