Precious metals: A cautionary tale

Metals go up; metals go down. Been dabbling with shiny for over a decade now.

What’s happening currently is unlike anything I’ve seen before. The last pricing surge was 2008-12’. This was during the global financial crisis and Great Recession. Housing prices tanked, a lot of people lost their asses and the stock market had two years of negative or breakeven performance.

The current surge in pricing is exponentially greater than the last and nobody wants to say aloud why that is. The stock market has been on a tear. So it’s not that. There’s no recession as of yet. So gold/silver pricing is clearly decoupled from the market and stated economic fundamentals.

So what’s prompting the surge? It’s a few things. The election of one Donald J Trump is one. Gold was at $2,600 in October of last year. The month before he was elected. Still at a historic high to be clear; but, only a few hundred dollars above the previous surge high a decade earlier. It’s hovering around $4,300 today. Things changed after Election Day. It’s widely believed that his economic policies are going to torpedo the US and global economy so people worldwide invest in metals as a historic hedge. At a broader level; foreign countries which have historically invested in US Treasuries are worried that our countries debt is unsustainable, may choose to not buy for political reasons and have undoubtedly taken note that the $USD has lost 10% of its value in the past year. So these foreign governments and institutions are shifting to gold too. At the same time; you’ve got crypto bros shifting from meme coins to metals. Silver in particular. There’s entire wallstreetbets type groups devoted to physical and or options trades. So there’s concerted manipulation going on too. Think GameStop version 2.0 particularly with silver.

When will prices stop climbing? I have no idea. I think it’s entirely possible; if not likely, that prices will continue to climb. Particularly if the R-word (recession) becomes a thing.