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The Federal Reserve has trained investors like Pavlov’s dogs to buy every single dip, even the little ones. That strategy works until it doesn’t anymore. At some point, low prices will give way to even lower prices. Have we finally reached that point?

For one thing, I wouldn’t recommend going into financial chat rooms and message boards for guidance on this. Every time the stock market goes up a little bit, every social-media guru is bullish. When the market goes down, they’re bearish. It’s literally the same people flip-flopping with every uptick and downtick of the indexes.

Here’s what they won’t tell you: while the S&P 500 is tripping the -7% circuit breaker and the Securities and Exchange Commission has to halt stock trading, gold is holding its own. It’s one of the bright spots on a dour, sour day as the big banks, tech high flyers, and other bull-market leaders are now crumbling.

I do feel some sympathy for the folks who bought at the top. Today I read that the Robinhood app, host to many beginners trading their very first stocks, went down for the second Monday in a row. That’s got to be frustrating, and more than a little scary, for traders who didn’t understand that the market moves in both directions.

Courtesy: Yahoo Finance

There aren’t many places to seek shelter on a day like this. Like I said, gold is doing just fine. Precious metals and miners haven’t depended on the desperate panic-buying of conditioned investors, or on the government’s generosity with taxpayer funds, or on the Federal Reserve’s relentless interest-rate suppression scheme.

And I do mean relentless – the 10-year U.S. Treasury bond yield is now down to 0.5%, and everybody’s expecting more cutting during the Fed’s two-day meeting on March 17 and 18. The emergency interest-rate cut from last week was supposed to keep the markets calm and composed, but evidently it didn’t work this time.

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    To make matters worse, the markets are subject to forces outside of its control. The coronavirus could take months or even a year or longer to contain. Foreign nations are manipulating the price of oil, dragging the S&P and Dow lower as U.S. traders helplessly watch in horror.

    Courtesy: @realDonaldTrump

    And the ultimate circuit breaker, the market backstop we all know as Fed Chairman Jerome Powell, can’t stop what’s happening now. The man said that “We will use our tools and act as appropriate to support the economy,” but the Federal Reserve doesn’t have the power to stop the coronavirus or prevent Saudi Arabia and Russia from wrangling over oil.

    For index-fund investors, this is no time to be a hero and buy such a vicious dip in the markets. We’ve now crossed the line between buying a dip and catching a falling knife. It’s not about moving averages or technical indicators. It’s about a market that the central banks can’t control anymore.

    Not that they won’t keep trying – of course they’ll fight it tooth and nail. After the next rate-cutting meeting, though, they’ll basically be out of ammo. Does the Fed have other tricks up their sleeve that they’re not telling us about? It’s possible, but you’d think they would have deployed every weapon during a market swoon like this.

    Meanwhile, precious metals and miners already had their bear market from 2011 to 2016. Now it’s their turn to prosper, and this provides you with options you might not have considered before. You don’t have to cut and run when the S&P goes south – you just have to think differently and look for better investments, which have really been here all along.

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