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.
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
A look at precious metals shows gold and silver are devoid of any momentum at this time, while copper has been steadily retrenching from its recent highs. Copper is playing off of the global economic growth, but a metal that is surging on the charts and catching the imagination of metal traders on the London Metal Exchange is zinc. Zinc is used in numerous industrial and consumer applications. Steel companies use zinc as a rust inhibitor, so it’s quite important to manufacturing. The United States Mint also uses zinc to make pennies. The problem is that the world supply of zinc is contracting. However, zinc is currently around a three-year high and looks good as an 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
Gold and oil are finally seeing some upward lift, but it has more to do with the geopolitical landscape than inflation and economic growth. As I said in recent weeks, the price of gold could be headed higher, but only if we see a rise in geopolitical tensions. That’s what we are witnessing at this time, so there could be quick money to be made. While the Ukraine situation appeared to be settling down, the destruction of a Ukrainian aircraft with soldiers on board will not help the already tense situation. Russia has also halted ... 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
Technically, the Federal Reserve’s job is to oversee the monetary policy (short-term interest rates) of the world’s biggest economy. Obviously, it does, but it’s also important to remember that its opinion and carefully chosen words also have a major impact on the global markets and world economies. If the Federal Reserve says the U.S. economy is doing well, investors flood the markets. If, on the other hand, the Federal Reserve says the U.S. economy is having difficulty gaining traction, investors turn their attention to precious metals to hedge against a weak U.S. and global economy and inflation. It’s worked like clockwork since the Federal Reserve stepped in to help kick- ... Read More
After 12 years, gold bullion’s glorious bull run ended with a thud in 2013, retracing 30% and locking in the biggest annual decline since 1981. Many speculate that gold bullion prices melted in 2013 as investors tried to figure out when the Federal Reserve was going to be cutting its generous $85.0-billion monthly bond purchases. Investors lean toward gold bullion and other precious metals as a hedge against both a weak U.S. dollar and inflation. A tapering of the Federal Reserve’s monetary policy suggests that the U.S. economy is getting stronger. While there was no real sign of sustained ... 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
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
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