LAWRIE WILLIAMS: Gold, Silver and Platinum all on the up
Last week’s volatility in the precious metals markets – presumably in part due to the aftermath of the GoldStop, and other short-sold stocks, price surges in the equities markets – seems to have been replaced by something of an upsurge in gold, silver and platinum prices so far this week. The initial success of the short squeeze on some equities, in turn, led to the relatively seemingly mostly unsuccessful tilt at similar attacks on the short positions in silver in particular. All the precious metals, after the silver attacks had been repulsed, had been subsequently marked down, but now seem to have been making something of a recovery. Platinum in particular has risen sharply and gold and silver are also up, although palladium seems to have been left out of the upsurge – but is potentially the most volatile of all.
Whether this is the start of a general precious metals price recovery still remains to be seen. Silver and platinum have both gained in price since the beginning of the year – the latter significantly so - but gold has been somewhat in the doldrums losing around $60 so far in the first six weeks of the year.
How does all this tie in with the more general expectation that precious metals prices will, for the most part, end the year higher. Our own prediction has been for gold to reach $2,225 some time in Q4, silver to reach $32.25 and platinum $1,285. We also predicted palladium would be at around $2,175 in Q4 – somewhat below its current price which may prove to be a miscalculation should sales of light gasoline (petrol) powered automobiles pick up. Given that U.S. equities continue to mostly move higher, expectations are presumably that the world’s largest economy is doing rather better than we have been anticipating. Nevertheless we still do see a major equities crash ahead, but the way things are going this may only come further into the future than we had been predicting.
Silver and platinum both appear to be on track to meet our Q4 price targets – indeed platinum is running well ahead - but gold seems to have been underperforming so far. But we would also point out that it’s still early days yet. We are only into the second week of February so there is plenty of time for these target prices to be reached, or even perhaps exceeded – and as I write gold does seem to be making something of a recovery, but still has a long way to go to even catch up with its 2020 high point achieved back in August.
There are, of course, some contrary views out there. Harry Dent, for example in a couple of video interviews, has been predicting a huge equities market crash, occurring as soon as April, citing the enormous central bank inspired global debt build-up as the trigger for the market meltdown. He sees gold falling back quite drastically too – perhaps by as much as 50% - somewhat less than the 90% fall he is predicting for equities - and he’s even more pessimistic on silver and bitcoin prices too. Let’s hope it doesn’t come to that. If it does occur we will be in a depression to more than match that of the 1930s.
Our own prediction has indeed been for what we see as an inevitable sharp fall in equity prices at some time in the future given the Covid-19 impact on global economies. Current equity market strength seems to deny the fact that a huge number of businesses have been decimated by the pandemic and millions of people thrown out of work. But we are also seeing some sea-changes in investment activity with a huge new group of mostly younger investors impacting the markets in ways the traditional investment community had never reacted. This influx of new young money, influenced by social media and no-cost online investment brokerages, may well be sufficient to counter any tendency towards massive market falls. If the markets don’t crash then precious metals should meet our Q4 targets, and perhaps exceed them.