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Gold is to hold and silver is to trade

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(Kitco News) - Gold is the commodity to own as a hedge against the massive amounts of stimulus central banks and governments have flooded financial markets with, but silver is the metal to trade as it looks like momentum is returning.

The move actually started last week as the precious metal rallied more than 5% on Friday. Since then prices have continued to rally covering all their gains from the March selloff and hitting a three-month high above $18 an ounce.

At the start of the week, TD Securities said that they expect to see an “explosive” move in silver.

Many analysts have been waiting for this move as the gold-silver ratio traded above 100 points. Chaos has dominated financial markets impacted by the coronavirus, and silver has struggled to find a bid in the last two months as weak industrial demand has dominated sentiment.

Silver is going to perform a little bit better than it has,” George Gero, managing director with RBC Wealth Management, told Kitco’s Allen Sykora. “Silver was held back because of its industrial component. Now, with the reopening of many of the economies, the industrial component is a tailwind instead of a headwind.”

Although long-term bullish trends in gold and silver continue to build, investors do need to be aware of long-established seasonal trends in the precious metals market. This week, Mickey Fulp, creator of the Mercenary Geologist newsletter, said that traditionally the summer usually marks the low point in gold prices.

"Usually, the seasonal low for gold during the year is sometime between the 1st of July to mid-August,” he said.

So maybe chasing the gold price is not the best move this summer, but we definitely can’t ignore the much larger picture. In an interview with Kitco’s David Lin, Peter Schiff warned investors about the growing inflation threat caused by the Federal’s actions.

“I think most people are going to get wiped out by the inflation tax,” he said. “Somebody has to pay the bill for all the bailouts and all the stimulus, and if we’re not raising taxes, then how are we doing it?”

That is it for me after a busy week self-isolating in Montreal, but before I go I just wanted to wish my neighbors to the south a happy and safe long weekend.

With the weather improving and the long weekend here, it is easy to forget the health risks that continue to persist. Please respect social distancing guidelines and do your part to make sure everyone you care about stays safe and healthy.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.