LAWRIE WILLIAMS: Gold and silver continue rising as dollar and bitcoin slip
The first full trading of the year opened with gold and silver continuing to build on the gains seen in the final couple of days of 2017. Whether this is just New Year euphoria or the start of a rise remains to be seen but opening portents are positive for precious metals (as indeed they were at the beginning of 2017). Conversely general equities were slipping in Europe and bitcoin was stuttering again. The stats as I write according to the www.sharpspixley.com website are: gold at around $1,311, silver at $17.07 (the Gold:Silver ratio at around 76.8), while the dollar index (DXY) is at around 91.91 – a more than 10% fall over the year. Bitcoin is at 13,593 – hugely above its early 2017 level but well below its intraday top of close to $20,000 seen only a little before Christmas.
The dollar index statistic is probably the most significant for precious metals. Gold in particular is seen as an indicator of dollar strength, or otherwise and while the U.S. Fed may talk of a strong dollar, President Trump may well, according to some of his statements, be thinking otherwise to make U.S.-manufactured goods more competitive on world markets.
So the portents for precious metals at the start of trading in this New Year are looking positive, although whether they will be allowed to continue so remains uncertain. They may not even survive the day once U.S. markets open. There does seem to be increasing evidence that the gold and silver markets are being manipulated to suppress, or at least control, overall long term price rises which is hardly surprising given that far larger markets than gold and silver have indeed been shown to be open to manipulation and big money players have been fined accordingly by the regulators. But as we have noted here before the fines imposed are minuscule compared with the profits that can be made so may just be considered a cost of doing business.
Given that perhaps all markets are manipulated in favour of the big money, predicting future price trends, and investing in any market means one has to second guess the really big players out there. But the big players do occasionally get it wrong and the markets are overtaken by events outside big money control. Given the completely unprecedented global debt levels this may well be such a time – but even if not the gut feeling is that precious metals are in, at the least, an overall controlled growth pattern. At some stage the dam will burst and prices take off to the heights, but this may yet not be the time for such a scenario. In our view keep an investment in precious metals. At worst it should see slow and steady growth, but also remains one’s bulwark against total financial collapse.