“You never give me your money,

You only give me your funny paper…”

I’m a Beatles fan and last night I was listening to their song, You Never Give Me Your Money, from the 1969 Abbey Road album. The song is about the financial and personal difficulties facing the band at the time, but I cover the markets for a living, so the lyrics made me think of the Federal Reserve (not Lennon and McCartney’s intended topic, of course, but relevant nonetheless).

The Federal Reserve has been shoring up the stock market through aggressive monetary stimulus. The Fed’s balance sheet has ballooned following its March 15 announcement to initiate quantitative easing, which now exceeds $7 trillion.

The U.S. central bank has committed itself to sustaining the stock market bubble, by paying retail prices for inflated assets. Most of the Fed’s bond purchases have gone to huge corporations, which benefits shareholders but not necessarily workers and the broader economy. Hence the disconnect between the rally and the economy.

Many of the indebted companies getting bailed out by the Fed are burdened with debt servicing costs that exceed profits. Much of this debt hovers at junk status. Even more curious is how the Fed is buying the debt of solid corporate stalwarts that don’t even need help from the central bank.

In other words, the financial system is awash in funny paper.

Stocks extended their rally and soared Tuesday, as monetary stimulus continued to fuel bullish sentiment. But I urge caution. The economy is in a recession and the coronavirus pandemic is actually getting worse.

As of this writing Wednesday morning, Johns Hopkins reports that the U.S. has witnessed nearly 128,000 deaths from coronavirus and more than 2.6 million cases. Health experts predict we’ll see at least 200,000 deaths in the U.S. by September. Over the past two weeks in the U.S., the rate of new coronavirus cases has risen 80%. Officials in eight states have reported single-day highs. Several states are re-closing businesses.

Meanwhile, Washington is divided by bitter partisanship and remains gridlocked on additional fiscal stimulus. “…and in the middle of negotiations, you break down.”

Yet stocks have rallied. It’s as if Wall Street is living in an alternate universe. Unless we make medical progress against the COVID-19 outbreak, the market is vulnerable to further declines.

Investment conditions will remain tumultuous, right through the presidential election and beyond. Today, I’ve decided to step back from the market’s daily gyrations to dive into the latest batch of reader letters. Let’s see what’s on your minds.

Wall Street’s vaccine delusion…

“Do you think a coronavirus vaccine will come along this year to solve the pandemic crisis?” — Deborah H.

I’m not a scientist, but the evidence suggests that the emergence of a COVID-19 vaccine this year is highly unlikely. For any vaccine to reach the market, it takes many years of painstaking research and clinical trials. The world record for developing an entirely new vaccine is roughly four years. It also requires a boatload of cash.

Read This Story: COVID Vaccine: Silver Bullet or False Hope?

The main impediment is biology. Health experts warn that the coronavirus is mutating and might prove resistant to vaccination. Nonetheless, many business and political leaders are waving the white flag on the pandemic and they’re simply hoping for a vaccine. As the old saying goes, hope is not a strategy.

Detecting fraud…

In response to Investing Daily’s continuing coverage of investment scams, several readers shared their personal experiences. Here are two instructive examples:

“An elderly friend got an email from Microsoft saying the company overcharged his account $225.00. They needed his account information to reverse the charges. Luckily, he called me. I told him if they had the info to charge you, they have the info to reverse it. Another scam.” — Pat B.

Read This Story: COVID-19 Scammers Want Your Stimulus Check

“I answered a call and they wanted to talk to my husband. I told them to call back after 5:00 p.m., then they said they could talk to me. It was from the so-called ‘police department group’ wanting to collect money for the policemen who are working so hard for our safety. I said they could send us the information, but he then said he wanted to verify our information. First asked for name, phone number, address, etc. I said, tell me what name and address you have on file and I will verify it. He got very nasty and hung up. Advice: let them give you the information first, so you can verify it.” — W.A.

The prevalence of financial rip-offs has reached epidemic proportions. According to a recent study conducted by the National Center for Victims of Crime and the Financial Industry Regulatory Authority (FINRA), about $50 billion is lost annually in the United States from schemes that defraud individuals.

The highest losses from these financial crimes every year occur under the category of investment fraud (see chart, compiled with data from the two organizations):

The yellow metal…

“I’m a huge fan of your Mind Over Markets column. It has become part of my daily routine and one of my favorite sources of financial news and analysis. You always manage to cut through the propaganda to get the real story. I also find your prose entertaining to read. Keep up the good work and thank you. I also have a question: you often tout gold as a smart investment now. Could you steer me in the direction of an appealing gold mining stock?” — Paul L.

Paul, you’re right to be interested in gold. Dreadful corporate earnings performance, geopolitical turmoil, and economic damage from the pandemic continue to pose serious threats to risk-on assets.

At least 15% of your portfolio should be devoted to hedges. As part of your hedges sleeve, about 5% – 10% should be in precious metals, such as gold.

Read This Story: The Midas Method: Why Gold Shines Now

I prefer gold miners, which offer the opportunity for exponential growth due to corporate operating leverage. Our investing team has pinpointed an under-the-radar gold miner that shines above the rest. This small-cap “rocket stock” is poised to blast off. Click here for details.

I’ll end with kind words from a loyal reader:

“Want to let you know how much I look forward to each issue of Mind Over Markets. I especially appreciate the concise, clear manner of presentation. Moreover, the information is always timely. Mind Over Markets is particularly important in helping to understand the current uncertain investment environment and how to cope with it, e.g., your recent article, “8 Defensive Steps to Preserve Wealth.” — Richard J.

Questions or comments? Drop me a line: mailbag@investingdaily.com. I’m especially interested in hearing about investment gains you’ve achieved with our team’s advice. Share your success stories!

John Persinos is the editorial director of Investing Daily.