by Jeff Clark, Senior Analyst GoldSilver.com; Advisory Board Member SWP
This brief report will highlight what’s taken place with precious metals this past quarter and year-to-date, along with how they compared to other assets. We’ll also briefly look at what potential catalysts lie ahead. We’ll provide this context in every issue of ITV to help you track the precious metals markets and make decisions.
What to Know
For the first quarter and first half of 2019, here’s the performance of precious metals, along with other major asset classes.
A few important highlights…
· Gold outgained all major asset classes last quarter, except palladium and gold stocks. It’s up nearly 10% so far in 2019.
· Gold is now at or near all-time highs in a total of 72 global currencies.
· Silver has underperformed gold, pushing the gold/silver ratio (gold price divided by the silver price) to 92.1, a 28-year high. This makes silver currently a better bargain than gold for those looking to add bullion.
· Bitcoin (not shown) spiked 200% last quarter. It’s up 230% YTD.
· Most chartists believe the gold price broke above a long-term resistance level in June. Gold has not exceeded $1,400 since August 2013. Piercing through such a prolonged trading range suggests the price is in for a run.
What to Watch
The Fed: The US central bank has completely shifted gears, going from raising rates to now likely cutting them. When discussing whether or not to push interest rates higher or plan for more QE, Chairman Powell said, “There will be a next time.”
It’s not just the Fed. As Bloomberg points out, “With central banks around the world turning more dovish, the latest move in gold may just be the start.”
Interest Rates: Wall Street has priced in a near 100% certainty that a rate cut will be made at the Fed’s July meeting. Rate cuts are generally gold bullish, since it diminishes gold’s holding cost and lowers competition from Treasuries.
Negative Interest Rates: The amount of government bonds paying less than zero hit $13 trillion in June, a new record. There is no evidence this trend will let up.
Currency Wars: President Trump continues to accuse foreign governments of currency manipulations. This and trade conflicts are gold bullish.
Geopolitical: The clash between the US and Iran continues, and there appears to be no end in sight.
Central Bank Buying: Kazakhstan, Russia, and Turkey added to their gold Reserves last quarter. China has added to its gold reserves six consecutive months. There is no evidence the trend of record-level buying from central banks has let up.