Not Losing Its Luster Yet: Market Rallying Events to Watch for Gold and Silver
As Metals Continue to Perform, These Are the Market Rallying Events to Watch for Gold
Precious metals continued their winning streak this week, and there are several market rallying events to watch for gold over the next year. Gold rose above $1,290 an ounce this week before pulling back slightly towards the end of the week. This pull back was in part due to some profit taking and the dollar going up some points.
Gold is moving in a similar way to how it did at this time last year. However, while last year had some unexpected events that caused it to jump initially (notably Brexit and Trump’s election), this year is heralding even more uncertainty in the economy.
What this means for investors: Investors are looking for stability for their savings, and with gold up 10% this year, it is looking like the safest right now. The wild ride that the stock market has been on is coming to an end as investors are growing more risk adverse. Strategists are seeing that now is the time to take earnings and move it into safe havens before the next major market moving event occurs.
Geopolitical Power Plays and European Elections
Some of the possible market rallying events for gold are going to come from how the situations in Syria and North Korea play out. Increasingly hawkish rhetoric out of the White House and State Department has been triggering price movement in gold. Words have been translating into action with U.S. aircraft carriers re-directing to the Korean peninsula and airstrikes rocking Syria.
The rise of populism and anti-establishment sentiment in Europe (as well as the U.S.) is spooking investors. Marine Le Pen’s rise to prominence in the French presidential election is proof that the same popular sentiment that shocked the establishment by voting for Brexit and President Trump is persisting.
What this means for investors: The VIX is signaling investor fear as well. The VIX (the CBOE Volatility Index) measures confidence going forward, and the data is showing a lack of it. As it goes up and the dollar strength pulls back, gold will likely go up in correlation.
Trump-o-nomics at Work
President Trump campaigned on promises of defense and infrastructure spending increases. Former Fed Chairman Alan Greenspan is warning that the U.S. can’t afford Trump’s spending plan, however. He warns that there is no way to pay for it with the amount of debt the government holds, and yet Trumps proposal would add $1 trillion to updating infrastructure.
What this means for investors: Inflation will skyrocket as spending floods the markets with fiat money to pay for the projects. Watch more here.
Don’t Forget Silver As It Poises to Rally
Silver bugs are getting excited watching their metal climb too. The market rallying events to watch for gold will certainly boost silver as well. Silver has already risen 14.3% in the first quarter of 2017. It had a similar trajectory through the first half of 2016 (outperforming gold for the year), but this year has even more bullish elements in place.
What this means for investors: Three key indicators are in appearing to fall into place that historically have preceded significant silver price runs. These are a bottoming of interest rates, a peak in the stock market, and significant monetary change or collapse. In the past, these events were spread out a little over a decade before silver’s big take-off in 1941. They could be happening right now in a more concentrated manner though. The stock market is showing worrying jitters that it’s bull run is about to sharply correct. Interest rates and inflation are rising. See the correlation between these macro trends and silver here.
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Here are some articles from the web discussing the topics in this week’s post:
Gold not Losing Its Luster Yet: Market Rallying Events to Watch for Gold
Geopolitical Power Plays and European Elections
Trump-o-nomics at Work
Don’t Forget Silver As It Poises to Rally
As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at 602-955-6500 or toll-free at 877-354-4040.
