Thanks to global currency devaluations, investors have been turning to precious metals like gold and silver as a hedge against inflation. Precious metals are a trustworthy and realistic investment instrument that should be in every investor’s portfolio.
Since hitting a low of $253.70 in July 1999, gold prices have surged. While some economists think gold’s historic run will come to an end, others are not so sure. The overarching driver of the price of gold will continue to be the global financial crisis and ongoing tensions in the Middle East.
If you’re looking for a precious metal that historically outperforms gold…look to silver. Since trading as low as $4.00 per ounce in late 2001, silver reached highs of almost $50.00 an ounce in 2011. While silver prices have retraced a bit, the metal is still up more than 675 percent from its 2001 lows. When it comes to a precious metal bull market, silver consistently out performs gold.
Given our current economic situation, it’s not hard to see why investors turn to inflation-proof hard assets like precious metals.
With the stock market scrambling to find buying support and with the May West Texas Intermediate (WTI) back up around $50.00, I’d like to take a closer look at gold prices.
Why Gold Prices Are Catching My AttentionEveryone is aware the Federal Reserve will likely take the next steps and begin to raise interest rates either in July or by September, which will help drive up the dollar. A strong dollar translates into lower gold prices, which will help to keep some pressure on the demand side for the precious metal. Yet a look at the charts shows a potential trading opportunity in the works, despite the futures chain showing the price of gold staying around $1,200 to $1,215 an ounce for much o ... Read More
I have been in this business a long time, and I believe that the best tactic is to combine as many positive factors as possible in order to have the highest probability of success. There are essentially three main methods to look at; this includes fundamental analysis, technical analysis, and quantitative models. You don’t need every single category of analysis to be completed; you just need enough evidence from all to indicate whether or not a stock or index will move up or down. Obviously, there is no 100% guarantee, only a level of probability. Taking a look at the precious metals market, over the past coup ... Read More
With the new year just beginning, many investors will begin looking at their portfolio and trying to figure out how to shift their investment strategy to include sectors that should outperform in 2014. One investment strategy I like to use during the beginning of the year is to look for a situation where fundamentals are improving, but market sentiment remains weak. At year-end, many times you will see tax loss selling occurring. Essentially, investors are selling those holdings that have gone down the most to crystallize the losses for tax purposes. This also presents an opportunity—if the long-term investment strategy is sound. One sector that has been hit hard is the precious ... Read More
Do you feel wealthier today compared to last year? According to the Federal Reserve, you should, as the household net worth of Americans rose 2.5% between the second and third quarters of 2013 for a total of $77.3 trillion. (Source: “Financial Accounts of the United States,” Federal Reserve, December 9, 2013.) The Federal Reserve calculates household net worth by looking at the value of stocks, homes, and other assets, minus mortgages and debts. In fact, the nominal total wealth is at a record high. Adjusted for inflation, the current level of net worth is approximately one percent below the peak prior to the Great Recession. On paper, it appears as though econom ... Read More
A friend of mine asked me the other day about the best way to build a long-term investment strategy. This is a great question, but it’s also one of the most difficult ones to answer. Obviously, different people have various goals and objectives, especially when it comes to risks. For me, the way I put together an investment strategy is by looking to buy things when they are on sale, including stocks. Over the past couple of months, if you’ve been following my articles, you’ve likely noticed that I’ve started to become quite bullish on gold mining stocks. This is the classic investment strategy ... Read More
One of the interesting things about investors is how so many become complacent over time. When precious metals like silver were rising steadily, more and more people jumped on the bandwagon. But times have changed.With few people in the media talking about precious metals, I think it’s a good time to take a look at silver, as 2014 could potentially be a very strong year for the metal. Obviously, we know that 2013 was a tough year for most of the precious metals, as investors began to believe that economic growth was going to accelerate globally. Over the ... Read More
When many investors think of blue chip stocks, a common name that pops up is McDonalds Corporation (NYSE/MCD). A blue chip stock is traditionally a well-established company generating stable corporate earnings and usually paying out an attractive dividend yield. McDonald’s certainly hits the bull’s-eye on these blue chip metrics, which is especially attractive in today’s low-interest-rates world with its forward dividend yield of approximately 3.3%. The real question to ask is what is McDonald’s potential for corporate earnings growth over the next few years? There are two underlying f ... Read More
As far as investment and trading opportunities go, gold is currently the stock market’s poor cousin. No one really craves the yellow ore at this time. The reality is that unless you are looking for jewelry, there’s really no reason to buy the metal right now. Back in September, when I last discussed the prospects for this precious metal, I wrote that “in the absence of further turmoil in Ukraine, gold prices could deteriorate to below $1,200, possibly even $1,180.” The precious metal did bounce to the $1,225 level recently on concerns surrounding ISIS and the economic situations in both Europe and China. Since then, it has also collapsed to below $1, ... Read More
I have not talked about gold for some time, as there has been no reason to get excited about the yellow metal. Yes, it’s shiny, but it doesn’t appear to be sparkling at this time. After the gold bugs got excited about the opportunities in the precious metal, pushing prices to above $1,300 following the onset of geopolitical issues in both Ukraine and the Middle East, the aftermath has been dull. As I said back in June, the only reason I would trade gold would be to buy on weakness near $1,200 as the fundamentals, in my view, are irrelevant at this time. Gold still seems to be more of a geopolitical trade. (See “ Read More
A few weeks ago, I suggested that gold prices could likely head higher should the situation in Iraq escalate into a bigger conflict that brings in Iran and the United States. In my view, gold is simply a geopolitical trade at this time, contingent upon what happens in Iraq. There’s also the situation in Ukraine. At this time, though, it appears as though President Putin has no interest in escalating the conflict and making the country vulnerable to more economic sanctions. When I last wrote on the precious metal, spot gold was trading at $1,276 an ounce. The yellow metal managed to edge higher to $1,324, prior to the current stalling on ... Read More
While the stock market has been struggling this year, under the radar, gold has been moving higher. The tense stand-off in Crimea is clearly adding some support to gold, as an outbreak there could drive the precious metal much higher in the short term. The geopolitical risk also includes the tensions between Israel and Iran in the Middle East. On the fundamental side, we have China continuing to amass significant positions in physical gold, as the country looks to diversify its massive $3.0 trillion in reserves away from U.S. bonds. Buying in India has stalled, but the country continues to be the world’s largest market for ... Read More