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Stock Market Crash 2021— Why Gold Investment Products Will Be Your Saving Grace

November 1, 2021

O3 Mining

Stock Market Crash 2021 — See our follow-up article, Stock Market Crash 2022 — How to Prepare for a Market Downturn
Stock market crash fears have played heavily on many investors’ minds as of late. The annual inflation rate in Canada soared to an 18-year high in September of 2021, driven by high gas prices, skyrocketing housing expenses, and rising food prices. Inflation rose to 4.4 percent, exceeding the average analyst expectation of 4.3 percent — the highest level since February 2003, according to Statistics Canada statistics. It was the sixth month in a row that headline inflation exceeded the central bank’s 1-3 percent target zone.

At the time this article was written, gold prices climbed beyond the critical USD $1,800 per ounce mark, as a weaker dollar and concerns about rising inflation boosted demand for the safe-haven asset. This perfect storm has put the commodity on track for its best week since May. Currently, the Dow is worth more than 35,000, or just under 20 times the price of gold. If the Dow to gold ratio returns to 1:1, the US stock market will implode, while gold prices would soar to new highs. It would imply rising prices in conjunction with a sluggish economy (stagflation). 

Stock Market Crash 2021 and Inflation Concerns

Investors should also keep an eye out for any recent changes in expert forecasts for gold prices. These recent changes seem to reflect surging inflation rates, and the changing nature of short-term business trends. If we experience a drop in fiat currencies, both CAD and USD, gold will act as a prime safe-haven asset. Following a turbulent third quarter, the reflation trade remains intact as we enter the last stretch of 2021. With seasonality taken into consideration, the current inflation rate is climbing well above our comfort zones. The looming threat of higher inflation rates implies that investors should be careful with their strategy and focus on gold investment products. 

Stock market downturns are inevitable and no one has a fool-proof way of predicting a market crash (or a recovery for that matter). While some still believe we’re headed towards a market meltdown, it is advised to make investment decisions that would help them protect their cash and achieve their long-term financial objectives. Precious metal stocks and gold investment products are currently looking highly appealing and can offer lucrative returns heading into the new year.

Stock Market Crash — Gold to the Rescue

Historically, gold has considerably outperformed paper assets throughout severe financial crises. An investment in physical gold, gold stocks, or funds, is an excellent inflation hedge and portfolio diversifier. Gold investment products carry value over the long term and are considered the best safe-haven asset.

The fact that gold and the stock market are negatively connected explains why it is so resilient during market downturns. In other words, as one rises, the other tends to fall. Which makes sense — economic growth and stability boost stocks, whereas economic distress and crises benefit gold. When the stock market falls, anxiety reigns supreme, and investors flock to gold as a safe haven. When stocks are soaring, mainstream investors’ perceived need for gold is low.

It’s just impossible to prevent market drops — they happen all the time. You’ll be riddled with anxiety if you let a stock market crash play heavy on your mind. However, with a solid investment strategy that includes gold mining stocks and other gold investment products, you can help mitigate a potential market meltdown.


To learn more about how gold can help mitigate a stock market crash in 2021, contact our investor relations team today.


To learn how O3 Mining can add long-term value to your portfolio, contact us today.

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