Gold & Silver are Climbing, What it Means for Investors
$GLD, $SLV, $EXCFF, $SLW
Our economy is governed by its surroundings, the announcement of a federal interest rate hike sometimes causes the stock market to decline, even before it goes into effect. But since Donald Trump has become President of the US, the Fed’s actions have had the opposite effect, the market has risen on the tightening, signaling a rising economy going forward.
News of Brexit last year caused both Sterling and the single currency to fall in value, even though Britain was nearly a year away from taking even the 1st steps towards actually leaving the EU.
Now, it is the USD’s turn.
In a recent interview, US President Trump stated that the Buck was getting too strong, and that that made it difficult to compete with other countries, whose currencies are being devalued.
In response, USD’s value dropped immediately, to 2 week lows. And as a result, Gold and Silver both took a serious upswing in the aftermath.
President Trump’s comments have merit.
Though there are a number of benefits to a strong USD, there are problems with it too. One of those is that it becomes more expensive to do sell our goods to other countries.
If USD rises 0.05 compared to the Euro, then everything we sell to Europe becomes 0.05 to 1.00 more expensive. Meanwhile, if China keeps RMB Yuan artificially low, then international business with them is cheaper, and it can become difficult for our country to compete.
The Big Q: Is the USD getting too strong?
The Big A: That is hard to say.
Several factors last year sent its value soaring, including Brexit. Additionally, after the November elections, USD’s value increased more, hitting its highest level in nearly a year. But, this year, even before President Trump’s comments, USD had been suffering a decline, having fallen about 2% already in Y 2017.
After President Trump’s comments, the value of USD dropped by around 0.6%.
Its value Vs JPY was the lowest it had been in 5 months. Meanwhile, both Gold and Silver rose, with Gold climbing past 1,288.50 oz, the highest it’s been since before the election, and Silver experiencing a 1.2% gainer, pushing its mark to the highest it had been since just after the election.
Nothing happens in a vacuum.
Not only do world events impact our economy, they also have a ripple effect. In this case, when 1 investment is threatened, people naturally turn to another type of investment, to protect them.
Gold and Silver are 2 of the most popular acting as safe havens against the volatility of other markets. For this reason, they tend to go up as other markets go down.
Now, if the markets are so easily swayed, then what happens when another offhanded comment from President Trump, or someone else in power, pushes the markets the other way, will Gold and Silver decline in response?
Perhaps temporarily, but that does not make them volatile. In the long run, they are among the most stable investments one can make.
Silver in particular has a number of benefits.
Silver is cheaper than Gold, which makes it easier to buy and sell in small quantities.
But it generally trends upward during times of market volatility. In fact, during Bull markets for precious metals, Silver tends to rise higher than Gold, percentage-wise, making it a profitable investment overall.
Furthermore, supply/demand of Silver is shifting favorably for investors. Inventories are declining due to a reduction in silver mines over the last few years.
Meanwhile, use of the Devil’s Metal is going up, as it becomes an increasingly important component in a variety of electronics and technologies, from solar panels to medical equipment. As supply falls and demand rises, the value is poised to go up significantly in the future.
But the most appealing aspect of both Gold and Silver investments is the safety they offer.
They affected by the same volatility that other markets face. In fact, as we have seen demonstrated in this situation with the USD, as other markets decline, Gold and Silver tend to rise.
Therefore, if you have a portion of your “nest egg” in precious metals, they can protect you from that volatility. Even if your investments in stocks and currency fall, you still have Gold and Silver to fall back on, and your savings could be saved from being wiped out.
No matter what USD or how the markets are doing, owning Silver and/or Gold is recommended by experts for a balanced investment portfolio.
I like the royalty and streaming companies for the best leverage.
The more Gold they mine, the closer they are to running out. The major beneficiaries of this demand/supply/price action are the precious metals royalty and streaming companies like Silver Wheaton (NYSE:SLW) and Metalla (C.MTA, OTCMKT:EXCFF).
|HeffX-LTN Analysis for GLD:||Overall||Short||Intermediate||Long|
|Neutral (0.19)||Bullish (0.33)||Neutral (0.19)||Neutral (0.06)|
|HeffX-LTN Analysis for SLV:||Overall||Short||Intermediate||Long|
|Neutral (0.15)||Neutral (0.03)||Neutral (0.02)||Bullish (0.39)|