There has been a lot of focus on the recent gold rally. It has even caught the attention of the mainstream. But silver has also been quietly running upward. In fact, the white metal has outperformed gold this month. While the yellow metal has gained about 8% on the month, silver is up 11%.
Yesterday (Aug. 27) gold was up $16 per ounce and closed at $1,542.50. It was the highest close in six years. But it was an even bigger day for silver. The white metal was up 53 cents and closed at $18.17. Peter Schiff has been pounding the table on silver in recent weeks, and he talked about the big silver rally in his latest podcast.
Gold demand was up 7% year-on-year in the first quarter, according to the World Gold Council Gold Demand Trends Q1 2019 report.
Total global demand came in at 1,053.3 tons, driven primarily by central bank buying, inflows of metal into ETFs and strong demand for gold jewelry.
Gold holdings in gold-backed ETFs rose for the second straight month and turned positive for the year in November.
According to a report by the World Gold Council, 21.2 tons of gold, valued at about $804 million, flowed into ETFs last month. Total global holding rose to 2,365 tons.
The stock market got a nice bump on Monday with the news that there was a “truce” in the trade war. That lasted all of one day. The markets tanked on Tuesday as investors realized the “truce” really didn’t mean anything. The Dow Jones plunged 799 points, a 3.1% drop. The S&P 500 declined 3.2%, while the Nasdaq was down 3.8%. As one news outlet put it, “investors are quickly realizing that the US-China trade war is not over. The tariffs already put in place remain. And new tariffs could be implemented if the two sides fail to make progress.”
Well, yeah. Duh.
In his latest podcast, Peter Schiff said he wasn’t surprised at all by the drop.
Yesterday was another bad Monday on Wall Street. The Dow Jones dropped nearly 400 points and the NASDAQ fell deeper into “correction territory,” dropping another 3%. All five “FAANG” stocks closed in bear territory. These are the tech stocks that have propelled the long bull market. The NASDAQ is down 12.5% this quarter.
Apple’s announcement that it plans to cut production weighed heavily on the markets, along with another sign of trouble in the housing market — a big drop in homebuilder sentiment.
Peter said homebuilder sentiment is the first sign that the confidence bubble has popped.
On Oct. 10, the IMF released its Global Financial Stability report, highlighting increased levels of risk revealed by a number of global metrics. Just after the report was released, stocks in the US, Europe and Asia lost 4%, 3% and 4% respectively over three days.
As a recent investment update released by the World Gold Council points out, although stocks rebounded and regained some of those losses, the IMF report and subsequent market pullback “underline the relevance of holding gold in the near and long term.”
After hitting their highest level in 15 months in August, analysts expect Indian gold imports to continue climbing in the fourth quarter.
The flow of gold into India hit a 15-month high when it more than doubled to 100 tons in August. Demand started climbing in July when imports jumped for the first time in seven months.
When looking at the gold market, it’s easy to get caught up in the daily price fluctuations or the most recent headlines on the financial channels and forget about long-term market dynamics. Gold, after all, is generally more of a long-term investment that has historically served as a hedge against economic turmoil and protected investors against fiat currency devaluation – otherwise known as inflation.
The World Gold Council recently released its Gold 2048 report providing in-depth analysis of how the gold market will potentially evolve over the next 30 years. In general, things look pretty bullish for the yellow metal if you consider a longer view.
The World Gold Council described overall demand for gold as “soft” in its Global Demand Trends Q1 2018 report. Global demand was down 7% year-on-year.
The WGC said the drop was primarily due to weak investment demand. Investors added to their holdings of gold coins and bars, as well as gold-backed ETFs, but at a slower pace than Q1 2017.
There were some bright spots in the report. Gold demand in the technology sector marked its sixth consecutive quarterly gain. Jewelry demand held steady. And not all investors are spurning the yellow metal.
The SchiffGold Friday Gold Wrap podcast combines a succinct summary of the week’s precious metals news coupled with thoughtful analysis. You can subscribe to the podcast on iTunes.