Since the beginning of the year, both the DOW and gold have had impressive runs. The DOW now sits near 21,000 and gold has risen above the $1,260 level. It appears as though both may be ready for a pause.
No market goes straight up, and the DOW has risen nearly uninterrupted since Nov 5th where it opened near 18,000. Gold has taken a different path. It fell after the elections, only to turn sharply at the beginning of the year to recover nearly all of its losses.
The sharp movements of both the DOW and gold are indicators that the markets are seeking equilibrium after the surprise election of Donald Trump. Expectations will soon meet reality. It is still difficult to know how far apart they are, however by mid-summer we should have a much better idea.
Transition periods in markets can last months, even years at times. This is especially true when multiple variables are involved, such as geopolitical trends. Long term investors are quite happy to see this sideways movement because it gives them an opportunity to accumulate more of their preferred assets prior to the beginning of a major move.
With all that is happening in the world today, it is unlikely that the DOW will rest at 21,000 one year from now. The same holds true for gold at $1,230.
While it might be a bit of an up and down ride for the next several months, the conditions are favorable for gold and silver to rise in the years ahead. If the economy takes off and inflation begins to rear its head again, that is positive for gold (inflation hedge) and silver (industrial demand). If uncertainty enters the financial system or geopolitical world, they then become a safe haven.
It is unlikely the status quo will remain. Because of the unique characteristics of precious metals in the minds of investors, they seem well positioned for the years ahead.