April 2023: The Time Is Now
For ten years, our message to our clients has been based on the long-term historical role precious metals have played in global finance. When examined through that lens, it's evident that it's just smart to own some. Our heart as a company has always been to make the "smart" also "simple."
We've taken the stance that we would not promote precious metals from a position of fear as many in the industry do. Instead, we've proceeded with a message of measured pragmatism as we kept an eye on what the markets and global landscape are telling us. From the onset of 2023, both began speaking with an increasingly amplified voice.
Now is the time to accumulate precious metals.
Our February newsletter communicated that message. Sure enough, March brought the demise of two key banks and the introduction of instability in the global financial system. In this newsletter, we want to speak with a louder voice - now is the time. Because we are not financial advisors, we make no recommendation on the allocation of precious metals that should make up an individual's portfolio. However, we are comfortable saying that when examined over a three to five year window, one may want to consider increasing that allocation.
What's more, we would like to encourage you to share the message with your friends and family. We are moving into a period where each family should have some level of "financial insurance." As such, we are constantly working to improve the ease by which you and your loved ones can accumulate these metals and protect your savings and investments in the coming years.
Gold and Silver
What Do the Charts Say?
In our last newsletter, we examined the price action of gold over a twenty-year timeframe. In it, we stated, "While the price today indicates support at $1,500 per ounce, we believe it is unlikely to visit this trend line again for several years... Given the present financial and geopolitical backdrop, the recent drop to $1,625 in late 2022 is possibly a multi-year bottom similar to that seen in late 2009... From a charting perspective, this pattern, when formed over more than a decade (such as this one), often marks a powerful multi-year uptrend when the price breaks out above the highs formed in the handle. In this case, it would be a new all-time high above the $2,050 range."
The price action of gold since then has confirmed our observation. The day after we published our February newsletter, gold began its present rise. While the price has not yet closed above the $2,050 range, it is very close. The fact gold closed the first quarter right at the $2,000 mark is also significant. It's the highest quarterly close ever. This price action sets up a long-term multi-year advance.
To be clear, we do not expect a parabolic rise at this time. Those tend to come at the end of long-term market advances, not at the beginning. What these charts are saying is that, indeed, now is the time. For those who have sat on the sidelines or have yet to discover the value of these assets, 2023 will be a good year to average into the precious metals market.
Turning our attention to silver, its chart is certainly more muted. This is not a surprise. When economic weakness is forecast, shrinking demand for silver as an industrial metal temporarily offsets its demand as a monetary metal. Historically, this has been a good time to favor silver over gold because when it plays "catch up," the price action can be explosive. As always, gauge your tolerance for large price swings both up and down, and choose the metal that fits your temperament and objectives.
Times continue to change...
Gold Hovers Above $2,000 With Record High Now in Sight
"Bullion prices may test $2,200 an ounce by early 2024: UBS"
We think their price target may be a bit low. However, in 2024 gold will see its share of volatility.
JP Morgan’s Jamie Dimon: Banking Crisis Not Over. He’s Right
While many who own precious metals are not fans of big banks like JP Morgan, this article is important to let you know what they're thinking.
"Banks colossally dropped the ball on due diligence leading up to the 2008 financial crisis, and accounting standard setters updated guidance to better capture potential credit loss risks. But at least thus far, accounting standard setters have been dropping the ball on interest rate risk, the next-most-obvious risk."
Yes. Rising interest rates are the Genesis of the present problems. But how could they have failed to see it coming?
A Spate Of Recent Deals Raises Chatter Of A Fading Petrodollar
"For now, though diminished, the petrodollar remains the dominant currency for trades in oil and petroleum products. But that status will continue to evolve along with the ongoing realignment of global trade and geopolitical alliances."
With all the talk of a collapsing US dollar, it might be good to look at reality. Yes, the days of the dollar's hegemony are coming to an end. Still, in the world of fiat currencies, the US dollar is still the best looking house in a bad neighborhood.