Gold Set To Shine As Market Melts Down

By Chad Shop, of The Sovereign Investor

I like reading through the news app on my phone off and on throughout the week as a way to step back from my spreadsheets and research papers and tune into what is going on in society and what the large news outlets are touting at the moment. One prominent message kept sticking out at me: Big banks are expecting a plunge in the stock market.

There was an analyst from RBS who told clients to “sell everything.”

Wells Fargo expects another 10% to 20% plunge in stocks.

Even legendary bond investor Jeffrey Gundlach, founder of DoubleLine Capital, believes this is a time when you “protect your capital.”

Oddly enough, this is one time I somewhat agree with these analysts, except now’s not the time to sell everything, but to be strategic with what you buy.

And we have an opportunity today to make more than 50% during a stock market meltdown…

Before I get into the opportunity, let me explain why I believe stocks are on the cusp of a crash that will likely be worse than the 2008 financial debacle, but it won’t hit every aspect of the stock market evenly.

There will be sectors that plummet, some stocks will fall to zero, while others will thrive, like the opportunity today — we may even see another bounce in the market before shares fall off the cliff.

But that’s exactly why I’m not recommending a typical blue-chip U.S. stock. Instead, we are going to go into one of the only safe havens during a market meltdown: gold.

A Safe Haven From the Coming Market Meltdown

Gold is a commodity that has no industrial uses. It doesn’t generate any sort of yield. It’s the type of asset you buy just to store in a vault. Yet it’s one of the only assets that holds its value when the markets take a whopping.

Take a look at this chart to see what I mean:

See larger image

As you can tell, gold was a clear outperformer from 2007 through 2009. The price of gold climbed roughly 70%, while the broader market, as indicated by the S&P 500, tumbled as much as 50%.