Gold On The Move

Gold prices have finally broken out of the chains of the range-bound, floor-testing pricing pattern, and have moved north to test new limits. This just may be signaling a sizeable multi-year rally to come.

This transition comes at an interesting time when some analysts had settled into the idea that precious metals would continue to languish during the doldrums of summer. But it seems the gold market will do things its own way. Historically, we see bearish markets turn to bullish in the fall and winter months for precious metal, but other factors like market sentiment, statements from the Federal Reserve, news of currency performance and modification tend to be better gauges for gold and silver.

While most are excited about the bonus time to purchase silver on the cheap, others see silver as a major issue with gold’s run. In order to establish a bullish trend like gold has and confirm the bullish theme, silver needs to break $16 an ounce. So, why is silver doing nothing while gold is starting to move?

Have patience. As I have mentioned in other articles, I believe silver’s latest activity, or lack thereof, is heavily influenced by current market psychology. Precious metals, including silver, are not in mainstream media news. Instead, the noise of rising stock markets, cryptocurrencies and trade wars drowns out news on precious metals.

Perhaps more influential than market psychology, though, are the world’s central banks, which are stockpiling gold and not silver due to logistics. Gold is easier to acquire in large quantities, represents greater value and takes up far less space.

Another reason for silver’s stagnation is a slowing in industrial demand, resulting in obvious negative effects, and market sentiment is very low.

I believe we have entered the stealth phase of the bull market for gold and silver. When precious metals enter into the mainstream limelight, the ETFs will sell, the physical demand will start to rise exponentially, and silver will shine.

Although both silver and gold currently happen to have tremendous potential as investments, we do not look at precious metal as a niche investment that will produce dividends or as a “get rich quick” scheme. We look at it the same way that Chairman, CEO and Editor in Chief of Forbes Media, Steve Forbes does – an insurance policy.

When asked how he views gold as an investment during a recent interview on Mike Gleason’s Market Wrap podcast, Forbes said, “Gold is an insurance policy, and you should have it, because you never know what our political leaders are going to do. Whether you're comfortable with 5%, 10%, pick a number, but it should be there."

“Even though people say, ‘Well, other assets have done better over time.’ Well, that's just a reflection of currency fluctuations. Gold keeps its intrinsic value better than anything else. When you see the nominal price change, that's not the value of gold changing, that's the value of the dollar or whatever currency you're talking about, changing in value.”

The 5-10% allocation that Forbes mentioned can protect clients from currency fluctuations and from drastic monetary changes or fluctuations, even in their retirement. Please contact us today to equip your clients with this financial insurance policy.