Shining Prospects for Gold and Silver

McAlvany Weekly Commentary

Let’s take a look at our weekly recap of the precious metals markets for September 11. As of this recording, here is where precious metals stand: The price of gold is up $20 to around $2,500, relatively flat from a week earlier. The price of silver is down about 50 cents or 1.5% to around $27.76 from last week. Palladium rose up about 9% or around $88 to $1024, surpassing platinum. Moving over to the equities markets.. The S&P 500 is flat this week, though it did have a trading range up and down around 1% either direction. The dollar is up about 0.25% at around $101.80. Oil Drives Commodities Lower Looking at where the oil started the year, it is now down almost 7% but from its peak this spring, it is down 23%. Meanwhile, copper is up 7% for the year, and silver is up over 20% from the year. But if you look at them from their peaks, copper's down 20% from earlier this spring and silver's down almost 12%. It seems the market is transitioning for a period from a stagflation to a phase for the next few months of deflation where the commodities, copper, silver, and oil are all going to soften. Gold to Silver Ratio Widening With the softening in the commodities markets, it will likely push the silver versus gold ratio to 100 ounces of silver equaling one ounce of gold. Right now, the gold to silver ratio has moved up to one ounce of gold to about 87.7 ounces of silver. It seems that ratio will continue to widen back to a hundred to one. So if you have been holding onto gold and looking to buy silver, I think the opportunity for a gold to silver ratio trade is coming soon. Russia Buys Up Gold Russia's finance ministry just said that they plan on allocating 8.2 billion rubles — or $92 million US dollars every day — into gold and foreign currency purchases until October 4th. That's a sevenfold increase. While it’s uncertain what they’re preparing for, we do know that accumulating hard assets is a smart move for uncertain times. Plan Ahead for Ratio Trades To make trade from gold to silver, you would need silver to spike up to over 100 to one. Since these moves can happen within a matter of weeks or even days, it’s always good to plan ahead. Your McAlvany Precious Metals advisor can help you find your individual entry and exit points on products you have already purchased. You can always call us and get a free evaluation about what makes sense for your portfolio. If you haven't talked to your ICA broker in a while, it's time to do so. We can be reached at 800-525-9556.