Precious Metals Market Trends
The Wall Street Journal reported recently that China has taken initiatives to ease its monetary policies on top of coaxing local financial institutions to purchase government bonds instead of external or foreign bonds in a bid to increase the nation’s level of liquidity with regards to their financial system.
From a bird’s eye view this move by the Chinese corresponds with the Feds move for tighter fiscal controls with interests rates set to attract investors into the capital markets. For the most of 2015 the precious metal market remained steady despite the positive reactions from gold bugs as capital markets continued to attract investors with higher returns.
Another fact that is worth mentioning here is the fact that most commodities have been suffering incessantly due to the strong dollar which in actual fact reflects the weaknesses of other currencies rather than the strength of the dollar which in essence is maintaining stability. Looking at how things are, the dollar is not going to give up the advantage it has currently easily as the economies of China, Europe and Japan suffers.
These economies are left with only one choice and that is the Keynesian solution of borrowing and printing more money, which will directly impact inflation and when this starts happening, investors will flee the currency market and hoard up on gold and silver, pushing demand and initiating a bull gold run. Investors are already looking into hard assets – especially precious metals subtly, as most are aware that the entire financial system is not as sturdy as it seems and the possibility of it collapsing under its own weight is incredibly high.
As concerns bubble up with oil producing nations due to the low price of crude oil the surge towards the precious metal market seems inevitable. The signs are all there as the gradually weakening economies head towards a reset. Investors have already turned to the precious metals industry in a bid to balance their portfolios and although silver seems to be at a more attractive rate than gold, it has not been receiving much attention as most large volume silver trading is conducted via ‘paper transactions’ and confidence in ‘paper based precious metal holdings’ has been waning due to the lack of trust in issuing houses (lesson learnt from Goldman Sachs and Lehman).
Investing in anything is time consuming and more often than not requires a lot of energy to analyse markets as the complex associations between economic and financial perspectives could throw the average investor off track, especially with the current market conditions which seem to be completely illogical from certain angles adding to the risk factors. Although most investments carry a certain degree of risk the fact remains that risk levels vary with some investments having lower risk levels while others carry extremely high risk levels.
Currently, the only stable ground to invest from a financial investment perspective is into the precious metals market. The supply of rare metals such as gold, silver, platinum and palladium is finite and therefore buying physical gold means, buying an amount that cannot be replaced by ‘printing’ like how money is printed ensuring