Stephen Leeb, PhD is the chief investment strategist of The Complete Investor and Real World Investing. Steve and I go way back.

I first started working with Steve in 1992, during the “dead tree” era of media, when newspapers, newsletters, and magazines were print-based.

Back then, the Internet communicated only 1% of the information flowing through two-way telecommunications networks. Over subsequent years, as rapid technological change swept the financial markets, Steve’s observations have been consistently insightful and prophetic.

Dr. Leeb [pictured] received his Bachelor’s degree in Economics from the University of Pennsylvania’s Wharton School of Business. Within the following three years he obtained both a Master’s degree in Mathematics and a PhD in Psychology from the University of Illinois at Urbana-Champaign.

If the name Stephen Leeb is familiar to you, maybe it’s because he’s a sought-after guru who has been quoted in The Wall Street Journal, USA Today, Forbes, and Businessweek.

Or you may have caught him on TV, including frequent appearances as a guest of Neil Cavuto on Fox Business News.

Or maybe you’ve seen or read one of his many books in which he has presciently forecast major geopolitical trends and explained what they mean for investors. His ninth and latest book, due out later this year, is China’s Rise and the New Age of Gold: How Investors Can Profit from a Changing World (McGraw-Hill).

Dr. Leeb’s forthcoming book analyzes China’s activities to explain why the country will propel a massive bull market in gold that will take the metal to unprecedented levels.

As the coronavirus pandemic grips the global economy and financial markets, now’s an opportune time to tap Dr. Leeb’s considerable knowledge and gain his insights into what lies ahead.

Gold is a classic hedge during times of crisis. Where do you see the price of the yellow metal heading over the next several months and why?

John, you’re right that gold is a classic hedge in times of crisis. That definitely explains its recent strength, in both absolute and relative terms, since the pandemic started having an effect on the stock market.

Since the end of January through mid-April, gold prices rose more than 9% compared to a drop in the S&P 500 of 14.25%, a differential of nearly 25 percentage points in favor of gold. In The Complete Investor, I have long had gold as a top hedge that I recommended all investors should own.

While my TCI Growth Portfolio has outperformed the market in the pre-pandemic bull market, it has outperformed even more substantially over the past three months as we continued to add to our gold positions and give them a higher weighting.

Over the nearer term, as long as investors don’t have a clear picture that an economic recovery is in the works, I expect gold will continue to outperform. At some point, an economic recovery will start to come into view. The recovery could be sooner rather than later, depending on quickly governments in the West are able to focus on getting more parts of their economies opening up again.

Obviously, a lot will depend on how effectively we deal with COVID-19. But one thing that seems pertinent to me is that when you look at death rates from the virus, and even assuming that death rates in Asia may be somewhat understated, the crisis is now largely hitting the West.

In terms of gold-linked investments, which type of asset do you prefer? Physical bullion, gold funds, or gold miners?

Each choice has pros and cons. In a certain sense, physical gold is always the safest choice, but it has obvious logistical hassles: finding a dealer, storing and insuring it, and so on. And today there is an added difficulty.

In the U.S., there’s actually a shortage of gold, making it hard to obtain. One major refinery in upstate New York has stopped refining gold. My understanding from what I’ve heard is that as a result, even assuming you could locate bars or coins, you would likely have to pay a substantial premium.

In The Complete Investor we have recommended two exchange-traded funds that track physical gold. There isn’t a lot of difference between them and both allow you to share in the gains from rising gold prices.

We also recommend certain very carefully selected gold mining stocks, including both senior miners (those with current production) and junior miners with tremendous potential.

Miners are by no means equal, and there has been a lot of variance in their performance. Our picks not only have outperformed indexes of mining stocks, they have actually outperformed the price of gold.

When the COVID-19 pandemic finally eases, how quickly do you expect the economy to recover? Will we witness a “V” shaped rebound or is that too optimistic?

Much as I would love to say yes to a “V” shaped recovery, we’re clearly in uncharted waters. On the one hand, the ingredients that could supply the fuel for a powerful rebound are in place, namely the enormous amount of money being supplied by the federal government, which far exceeds the 2008-09 stimulus, along with the actions of the Federal Reserve.

Read This Story: Don’t Bet on a “V” Shaped Recovery

But first the economy has to be able to be safely reopened and one big unknown is how soon we will get antiviral drugs, which will precede an actual vaccine.

One stock that is a longtime recommendation of mine is a drug company that’s front and center in developing therapies to treat COVID-19 and that has been working closely with the Chinese. It has perhaps the best biological research department of any company in the world and it is one of the few stocks that has shown strong gains amid the pandemic.

In addition to gold, which defensive assets look appealing to you right now?

Especially in times like these, it’s more essential than ever to be exceedingly disciplined in what you buy. We look for companies that meet a range of strict criteria.

Among other things, we look for companies with deep franchises that make them relatively immune to competition. They must have great balance sheets and specifically be mostly debt-free. If they have debt at all, they must have cash on hand that exceeds that debt.

In general, we look for companies that have a lot of online activities and that are in essential areas such as health care. These standards exclude a lot of companies and finding ones that meet our criteria involves looking long and hard.

March was a terrible month for the stock market, which plunged into bear territory before partially rebounding in April. Do you expect the bear to return this year?

One thing a unique event does is to distort the utility of what normally are handy indicators. Will we make lower lows than we’ve made? I think you can make a good case that we won’t.

One factor is that horrible as the pandemic has been in many Western countries like Italy, Spain, and the U.S., Asia has been relatively unscathed. That suggests that many Asia-based companies, some of which we’ve been recommending, may do better than Western companies and provide support to the markets.

Still, in an integrated world without a broad-based recovery, all companies and the market as well will be affected.

It’s just really hard to predict. In the bear market of 2008-09, stocks after an initial recovery made several more bottoms before the bull took charge, so that could happen this time around.

Read This Story: Stock Market Rebound or…Bear Trap?

On the other hand, there are a couple of hopeful technical signs, namely that fewer stocks have been participating in the down legs.

What is the bond market trying to tell us about the economy?

The bond market is continuing to tell us, and this is something I discuss in my forthcoming book, that economic growth in Western economies, including the U.S., even pre-pandemic probably wasn’t nearly as great as some of the numbers said it was.

Clearly that did nothing to stop the bull market, but it speaks of some deep-rooted problems we will need to try to sort out once an honest recovery gets going. In particular, it raises questions about how much productivity certain sectors, such as the financial sector, really provide.

Which sectors do you think are poised to perform best in the immediate post-coronavirus world?

It’s less a matter of broad sectors than of individual companies with vital franchises in areas that will remain essential under virtually every condition: public safety, health care, entertainment, information, waste management, et cetera. Generating a large share of revenues through the Internet also is a plus.

Finally, I want to make the point that gold is not just a hedge to protect against a deflationary event. I expect it could be a leading performer over the longer term when we get to the stage where commodities outperform growth.

Over the past 20 years, well before the pandemic, it’s notable and I think widely overlooked that gold dramatically outperformed not only the surging stock market but every other asset class as well.

Editor’s Note: In the above interview, my colleague Stephen Leeb provided insights into the appeal of gold as an investment.

Looking for the best gold mining stock? Dr. Leeb has pinpointed an under-the-radar gold miner that shines above the rest. This small-cap “rocket stock” is poised to blast off, but most of Wall Street hasn’t even noticed the company.

The time to invest in his gold mining play is now, before the rest of the investment herd catches on. Click here for details.

John Persinos is the editorial director of Investing Daily. Questions about crisis investing? Send him an email: mailbag@investingdaily.com