LAWRIE WILLIAMS: Gold approaches $1,550 again, silver $20, platinum $1,000 –all still moving up!

Now the American markets are back at full swing following the Labor Day holiday, precious metal investors are certainly seeing some positive performances from the leading metals,  All are coming up against psychological barriers they may find it initially tough to pass, but we suspect it won’t be long before the weight of money going in to them causes the would-be market suppressors to reset their next barriers rather higher.  Equities are looking nervous with some hefty falls yesterday which could further push investment into the seemingly less risky precious metals complex.

As I write gold is sitting at $1,548. Silver at $19.45 and platinum at $990.  Palladium too is catching some heavy bids at $1,543 but it is proving to be hugely volatile at the moment.  The way it is currently looking  is that it will again surge past gold – but it could equally well come off $50-$100 or so from a big sale in what is a relatively small market!

Silver and platinum have been the star performers in the past week.  Silver has risen over 18% since the beginning of August and platinum around 16%, while gold, although it has risen over the same period, is only up around 10%.  The Gold:Silver ratio has fallen by around 10 points over the past few weeks and has breached 80 on the downside today – as we predicted. Although this has perhaps occurred quicker than we might have initially expected.  Silver has thus been a great performer over the past few weeks and could still go from strength to strength once gold gets through the $1,550 line in the sand.

Interestingly the boost in precious metals prices has been despite recent dollar strength. This has made their performance even greater in many, if not most, of the world’s currencies.  Indeed gold’s rise in the currencies of countries facing severe inflationary pressures like Venezuela and Argentina has been nothing short of spectacular.  Against the Venezuelan bolivar gold is up around 4,000% this year alone and against the Argentinian peso up 80%, although over 10 years, in this always-seemingly financially troubled nation, is up  over 2,000%.  Even against more stable currencies like the pound sterling it is up 27% year to date, the Canadian dollar 18%, the Aussie dollar 26%, the Russian ruble 16%.  (Australia and Russia are the world’s No2 and 3 gold miners so the price rise in the local currencies is hugely benefiting their gold producers).  Even in currencies like the Euro it’s up 26% ytd and in the Swiss Franc and Japanese yen up 16%.

In the US dollar itself gold is up around 20% so far this year, despite the rise in strength of the greenback.  The yellow metal had been out of favour with equities markets seemingly sporting much higher growth prospects, but this year so far this has definitely not been the case.  Indeed, over the past 12 months the Dow and the S&P 500 have been just about flat while the NASDAQ is even down a little.  The equities indexes have been held up by some strength in key tech stocks like Microsoft and Apple, both of which have enormous market capitalisations.  Probably because these two stocks have done so well. an aura of invincibility has spread to other tech counters with far inferior fundamentals, and in concert these have driven the equities markets to higher levels than can probably be justified. 

We are coming up to the 90th Anniversary of the enormous stock market crash of 1929 and to this eye it looks like the lessons of that past financial meltdown have not been heeded by current day investors.  Indeed there are many financial parallels between the present day and 1929, while the dominance of the high-end tech stocks should bring back memories of the far more recent dotcom boom/bust of just under 20 years ago.  History tends to repeat itself, while investment greed seems to be ever-present. 

In the words of right wing analyst, investor and commentator, Michael Lewitt, “Buy gold and save yourselves”.  A market crash is coming and quite probably sooner rather than later, and gold and silver may well provide the best wealth insurance available.  Platinum and palladium though, as very much industrial metals nowadays, could see their prices fall along with the equities, although do have some substance behind them which could mitigate the depth of any falls.  You have been warned!

04 Sep 2019

About the author

Lawrence Williams

Lawrence (Lawrie) Williams is a well known London-based writer and commentator on financial and political subjects, but specialising in precious metals news and commentary. He is a qualified and experienced mining engineer having graduated in mining engineering from The Royal School of Mines, a constituent college of Imperial College, London - recently described as the World’s No. 2 University (after MIT).

e: lawrie.williams@sharpspixley.com