August 2022
This summer has not been kind to the markets, including gold and silver. As geopolitical tensions and economic uncertainty increases, investors struggle to sort out the trends in place and their duration and severity. Capital flows unevenly across borders and into various market sectors. The resulting volatility causes wide swings in short periods of time, increasing investor anxiety and uncertainty.
We at OWNx have never been about short term trading. We built our platform over ten years ago to enable every investor, large and small to obtain gold and silver at some of the best prices available and to do it in a manner that is smart and simple. Enabling our clients to easily dollar cost average into these markets has been a hallmark of our offering since day one. Steady, monthly purchases are like buying any insurance policy. And we certainly don't see the need to protect against financial system instability ending any time soon. As you walk through this rough period in the markets, know that we are with you.
All the best,
The OWNx Team
Gold and Silver
What Do the Charts Say?
For the past year or more we've looked at the two to three-year charts to see what the markets are saying. Over the last few months, the pullback in precious metals has been difficult to watch. Still, the damage isn't catastrophic. In our last newsletter, we said, "A potential worst-case scenario could see a pullback to test the lower bound of this channel. If that happens, we would need to zoom out to the five or ten year chart to find a new uptrend line. "
Here we are, looking at the five-year charts for gold and silver. With gold, we see that the price has pulled back to touch two very important lines. The first is the trend-line set after breaking out of a six-year sideways consolidation. The second is the intra-day low that has been held now for over two years. It has bounced strongly off of these lines, which is what we expected should it touch them.
Silver has reached and bounced off its critical support line just below $19 per ounce. With all that is happening in the world, it's difficult to see gold and silver breaking down below these critical support lines. The fundamental reasons for owning gold and silver are as strong as ever. However, it still could happen in a major sell-off of all assets should there be a major crisis. We saw that in 2020.
Housing: Has it peaked?
In our last newsletter, we asked the question, "Is a housing crash coming?" Home sales and mortgage applications have both slowed dramatically. Most sane analysts (excluding the perma-bulls in real estate) see the housing market beginning to fracture, but not in the way you might think. Fracture in that it breaks into different pieces that must be analyzed differently.
For example, large cities are seeing the beginning of what could be a multi-year exodus. That puts support under home prices in the suburbs and surrounding smaller communities as many fleeing don't want to stray too far from jobs and family. Then there is the exodus from states such as California and New York and the migration to states such as Florida and Texas. Those broader markets will be impacted accordingly beyond what we see happening in larger cities. Finally, there is farmland. With global food supply chains breaking down, there is a renewed push to establish local food supply chains. This will help put support under farmland prices and some rural areas.
Why do we cover the real estate market in a precious metals newsletter? Because the metals markets do not operate in a vacuum, and housing is an indicator of the health of the broader economy. It is also a barometer of socio-economic trends that impact political alignments and overall cultural stability. On that front, there is movement that indicates new medium to long-term trends are underway that could negatively impact geopolitical stability. And that will impact the long-term price of the precious metals.
Home prices cooled at a record pace in June
“The slowdown was broad-based among the top 50 markets at the metro level, with some areas experiencing even more pronounced cooling,” said Ben Graboske, president of Black Knight Data & Analytics. “In fact, 25% of major U.S. markets saw growth slow by three percentage points in June, with four decelerating by four or more points in that month alone.”
Home prices to fall in these 210 housing markets—while these 204 markets will go higher
Housing economists have a name for what we’re seeing now: a “turned-over” housing cycle. That means the housing expansion, which started back in 2011, has been replaced by a downward slide. That said, just because housing activity is falling doesn’t guarantee that house prices will also fall.
OWNx offices will be closed for Labor Day, September 5th, however, our platform is always open!