Gold Strategy

Investors continue to find the Equity markets attractive even with no end in sight to the China and Brexit negotiations.

With investors feeling confident that their investments are in good shape, safe haven investments like Gold and Bonds can be overlooked at this time.

But let us not forget that in 2018 market sentiment flipflopped back and forth daily between “Risk-On” and “Risk-Off” ideology. Every day we continue to see risk in the headlines, whether geopolitical or economic, anything can happen in a moment that will turn markets around. Not to mention the continued ongoing political rumor mill here in the States.

These headlines can take a toll on a trader and investors’ emotions, but can also provide opportunities.

That’s where a Dollar Gold cost averaging strategy can make a lot of sense. When the price of Gold declines, many smart Gold investors see it as a buying opportunity to create a truly balanced portfolio.

At the time of this report, Equity markets are called up over two hundred points. So, when the price of Gold is most ignored by investors that might be the best time to, so to speak, “put your toe in the water” and put in place your dollar cost averaging strategy.

Palladium

Palladium prices have experienced a much-needed correction in the past week and may be vulnerable to further declines in the short term. Despite this continued tightness in supply the market is likely to see prices test higher across the medium to longer term.

To back up that philosophy, Johnson Matthey estimates that the Palladium supply deficit could reach one million ounces in 2019. So maybe there still significant room to the upside in the price.

Today’s Palladium EFP is quoted by some dealers at Minus 40 minus 20. If the EFP stays in negative territory higher prices are always a possibility.

Originally published April 1, 2019

Precious Metals Price Jump After Fed Announcement

Posted on June 20, 2019 by Pat Heller

A standard pattern for the past several years has been for the prices of precious metals to be suppressed in the 24-48 hours before the Federal Open Market Committee makes their announcements at the end of their meetings held every six weeks.  The US government, through its primary trading partners and allied central banks, tried again this week.

This week, the FOMC held their two-day meetings on Tuesday and Wednesday and released their announcement at 2 PM Eastern Wednesday afternoon.  The announcement left the federal funds interest rate unchanged, as was expected.  However, the text included more than usual language stating that the Fed would consider more financial data than it has up to now in making interest rate decisions in future meetings.  That can be interpreted as the US government saying that the economy is good now, but it is so weak that it wants to be able to cut the federal funds interest rate because the economy is declining.

Upon the release of Wednesday’s announcement, gold and silver prices took off.  As I type this late Wednesday afternoon, the after-hours trading for gold is at $1,359.50 and silver is as $15.12.  Gold prices are now up 6.8% since May 21, while silver has jumped 5.2%.  This rise has occurred despite major short selling of paper gold and silver contracts on the commodity futures markets.

The price of gold has not closed at $1,360.00 or higher for three years.  It has been more than four years since the US COMEX close exceeded $1,368.00.  There is a major shortage of physical gold in the London and New York markets right now.  Because of this, I think there is a strong prospect we could be near an upward breakout in precious metals prices.

In the meantime, the FOMC will not make another federal funds interest rate announcement until July 30, which will almost certainly be one of the most closely watched releases in recent months.

Patrick A. Heller was the American Numismatic Association 2018 Glenn Smedley Memorial Service Award, 2017 Exemplary Service Award 2012 Harry Forman Dealer of the Year Award, and 2008 Presidential Award winner.  He was also honored by the Numismatic Literary Guild in 2017 and 2016 for the Best Dealer-Published Magazine/Newspaper and for Best Radio Report.  He is the communications officer of Liberty Coin Service in Lansing, Michigan and writes Liberty’s Outlook, a monthly newsletter on rare coins and precious metals subjects.