Precious Metals Week in Review End of November
Gold towed the line last week, the first week of the Holiday Season. Opening trading on Monday at $1,750.00 and closing the week up just a few dollars higher at $1,754.00 without any notable peaks or valleys. With the lack of financial or economic reports and the trading limited largely to the European markets, it is evident that investors across the pond are keying off the U. S. Markets. One noticeable point about the recent correlation between the USDollar and Gold is evident with the strength of the greenback stifling any growth in the yellow metal since early this year. Once the USDollar began to slide in August, it triggered nearly a $100.00 increase in Gold to date. With rumors or leaks in advance of the December FOMC meeting signaling that the Federal Reserve would tap the breaks on rate hike increases slightly with an expected one-half basis point increase, down from the flurry of three-quarter basis points since it began the war on inflation.
When considering the effect of the aggressive posture by the Fed it is important to realize that the problems of today were not created yesterday but in fact a result of two decades of reckless monetary policy and out of control spending. The problem is not specific within the shores of the United States, but a contagion that spread through Europe and the BRIC countries due to their dependence on the World’s Reserve Currency, the USDollar. The severity of the situation has prompted a one noted economist to declare this the largest global bubble in history and points to the imminent Recession that by all accounts has already begun to be a significant event of Black Swan proportions.
Silver stepped out on its own and posted a surprising 2% increase to step out of big brother’s shadow. Opening trading on the holiday shortened week at $20.94 and closing at $21.44. The shiny metal is attempting to come of age as this is just another example of recent solo breakouts while Gold slumbered. The physical demand continues to outpace supply creating an historic gap between the spot price and the actual price to hold, touch, and feel coins, bars, or rounds. When the industrial component of Silver returns, it could possible signal the long awaited breakout that Silver Loyalists have awaited. With a current or future Recession occurring or coming, an increase in industrial demand for Silver seems months to years away allowing plenty of time to get in front of the wave. Otherwise everything else can come back to the other side if they want to
Also included in the chess pieces lining up in support of the Precious Metals is the paradigm effect of the generational investing. Baby Boomers and Gen Xers have lived adult lives through three Bull Stock Markets and two Stock Market Crashes. They have witnessed how fast the drop can be and how long the recovery can take. They have used Gold and Silver to hedge their portfolios, or at the very least observed others do so. Millennials and Gen Z’s have only known Stocks and Crypto. Crypto has blown up in their faces and many of the funds have canceled withdrawals. The Stock Market has an unencumbered run of 12 years without a true correction. Coupled with all of the other pieces in play plus the introduction of these generations, the future for Gold and Silver could be exciting.
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