Just how bad could this get ? I guess many of you know I’m a weather forecaster, but what I’ve not said, is that my current role is ‘Civil Contingency Advisor’. For those outside the UK, we had an act of Parliament back in 2004 – the Civil Contingencies Act. It lays out what is expected of the Emergency Response Community during times of national emergency (natural disasters, terrorism, pandemics etc). I’ve spent the last 8 years working with fellow emergency responders to help put plans in place for all of these (seemingly unlikely) eventualities. Many of them have indeed happened, and the plans, which are practiced and tested regularly, prove invaluable during the response and recovery phase. The pandemic flu plan has been well rehearsed, and the UK government has announced a range of measures as a ‘first step’ along with some very heavy hints as to what may come next. As reported by the BBC, ‘no tactics will be off the table‘ these include  isolating entire communities, ‘discouraging’ use of public transport and instructing people to ‘work from home’ – basically what is happening in northern Italy at the moment. In the fight to contain the virus, the country could come to a virtual halt economically. I assume this is the same for the whole of Europe, the US, the Far East and, in fact everywhere. Just let that sink in for a moment. Total economic collapse for a period of weeks, if not months. That would lead to a financial catastrophe the likes of which nobody living today has ever witnessed.

All of that may be prevented of course, and it’s very much a ‘reasonable worst case scenario at this point. The human cost could become very large, but I do find it interesting that the numbers on this page https://gisanddata.maps.arcgis.com/apps/opsdashboard/index.html#/bda7594740fd40299423467b48e9ecf6 have increased very little over the last couple of days.

From an investing point of view, I remain firmly (very) bullish on gold as a result of the extraordinary amount of stimulus and rate cutting that is now certain to come. Golds monetary role should come to the fore as currencies around the world are further debased. Silver will only perform well, if it too, begins to assume a ‘secondary’ monetary role. At this point in time it’s behaving like a commodity and (like copper for example) taking a big hit.

Looking further ahead, I can imagine a surge in demand following a period of enforced shutdown, so a ‘V’-shaped recovery is possible, unless we see the global economy deflate to the point of a prolonged global recession, or perhaps I should say, depression. Bottom line – I favour gold as a store of value during times like this. Silver may fall further before recovering. As for gold stocks – further downside is possible/likely, but as gold holds its ground, I’d expect them to out-perform the stock market by a wide margin.

What a mess we’re in.