Gold's winning streak stretches to five weeks, silver jumps on board
(Kitco News) - Precious metals had a big week with gold prices holding critical support above $1,800 an ounce.
But let's not forget about silver, gold's baby brother pushing above $19 an ounce and seeing its highest weekly close in four years. But even after these big moves, nearly all analysts across the board see the potential for both metals to move higher.
In a world awash in economic uncertainty due to the unchecked spread of the COVID-19 pandemic, investors are looking for safe-haven assets and paying more attention to precious metals. With yields expected to remain low for the foreseeable future, the only real store of value in the marketplace right now is gold and silver.
Unprecedented investor demand is the biggest driver for precious metals and it doesn't look like that trend is going to change anytime soon. In a report published Tuesday, the WGC said that gold ETFs saw their seventh straight month of inflows in June with gold holdings rising by 104 tons last month.
"To put this strength of demand into context, H1 inflows are so significantly higher than the multi-decade record levels of central bank net purchases seen in 2018 and 2019 and could absorb a comparable amount of about 45% of global gold production in H1 2020," the WGC said.
To highlight some anecdotal evidence, this week in the Kitco News Weekly Gold Survey, near-term bullish sentiment among Wall Street analysts hit its highest level on record.
This could indicate that sentiment has reached a peak and the market is due for a correction. Still, according to some analysts, the question that investors have to ask themselves is what has changed in the marketplace to warrant a shift in the trend. Are the number of COVID-19 infections dropping, is the Federal Reserve ready to shrink its balance sheet and raise interest rates, are Federal governments done implementing their fiscal stimulus measures.
This week E.B. Tucker, author of Why Gold? Why Now?: The War Against Your Wealth and How to Win It, had a very concise way to describe why investors should pay more attention to gold.
"The average person works for dollars and sweats and works extra hours, and sacrifices today for a better tomorrow in dollars. All the while, dollars are becoming less valuable," Tucker told Kitco News," he said in an interview with Kitco's David Lin.
While higher gold and silver prices are good for an investor's portfolio, I also want to point out that they are also good for the environment. For metals that we deem as precious, we do a terrible job recycling these finite resources.
According to a report from the United Nations, the world threw away $57 billion in gold, silver and copper in E-waste last year. The report noted that only 17% of e-waste generated in electronic waste was recycled, valued at $10 billion.
We as society need to do better so our children and everyone after us can enjoy a clean and healthy environment.
That is all for this week, rest up because the rally in gold and silver is just starting.