Gold & Silver Buck the Trend
The USD has just breached 92 (the highest since 2005), Oil dropped to just $45.70, and commodities (more broadly than oil) have hit a 12 year low. Normally a stronger USD means weaker gold price, but gold broke through USD1235 (AUD1513) overnight in stubborn defiance. While much of the fear of a dropping gold price is based on expectations the US Fed will raise interest rates (because everything is awesome), the above events (and lets face it… servicing $18t in debt) means the likelihood of that happening is getting less by the day. Bonds, the other “safe haven”, are seeing yields drop to farcically low levels meaning the ‘yield’ excuse for taking them over gold is almost gone. Factor in the risk of holding bonds in the world’s largest Ponzi Scheme
and the small, taxable, yield looks more and more like a bad reason to choose bonds over gold and silver. Remember too that bonds are priced at high highs and precious metals prices (especially silver) at lows and the capital gain stories look potentially very different. Finally, just a little more on that commodities crash – the only other times the commodities index fell like this were 1999 and 2008. Both just before the 2 largest stockmarket crashes in the last few decades…. Do you have your ‘safe haven’?