Monthly Archives: September 2015

No Uncertainties with Silver

silver barFor well over 2,500 years, silver has been recognized as a holding of substantial value. The Lydians (present day Turkey) were one of the earliest makers of silver currency, a bas relief coinage which differed markedly from the bronze and copper coins that the Chinese had been using years earlier. Fast-forward two-millennia, and we find ourselves still loving that lustrous precious metal.

In July 2015, the U.S. Mint sold out of silver bullion coins.The high demand for silver is simply a derivation of low spot price and the (potential) upside of buying bullion in bulk. It’s also important to note the value of silver futures. Now trading at $14.65 an ounce, spot value is higher than what futures are predicting. CME data suggests that October futures will be trading about $0.10 lower than current market value. For large investors, this fractional difference screams ‘opportunity’ from the rooftops. There’s a big upside to selling now and buying again in a few months. Taking advantage of the current-spot-versus-futures situation would ultimately lead to an increase in the futures value.

But not all of us are large investors with cash flow ad infinitum. For the small investor, the answer is simple: buy more silver, and soon. I say this as an investor and also a student of the market. With prices of silver reaching affordable lows and demand for the precious metal reaching unfathomable highs, it seems that an increase in price is right around the corner. We have to remember that the large corporate investors play a pivotal role in market prices. When the supply is struggling to match the increasing demand, there has to be a squeeze coming. This means that in order to combat the excessive buying, the price of silver will soar in an attempt to manage the supply needed on a day to day basis.

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Market Update – Gold Outperforms, Stocks Still Overvalued

wall-street-582921_1920Now that the dust has settled somewhat after Monday’s incredible market rout, it is helpful for investors to take stock of where we are in terms of equities, bonds, gold and other asset classes and to look at what to expect for the future and how to best position our portfolios.

Stocks undoubtedly had a wild ride over the past couple weeks. The S&P 500 is now down over 6% for the past month, even after clawing back about half of its severe losses from Monday. Year-to-date, the S&P is still down 4%, faring better than the Dow Jones Industrial Average which is down over 7% YTD, but worse than the Nasdaq composite which is still slightly positive for the year.

Gold has been the big out-performer over the last month, up over 3%. Compared to stocks, which are down over 6% in the same period, gold has outperformed by nearly 10% over the past month! As Anthem Blanchard, CEO of Anthem Vault, states:

“Given that gold has been the best performing major asset class in August, it is pretty amusing to see all of the negative reports.”

It certainly has been interesting to see the media continue to be so negative on gold, even as investors are obviously ignoring the pundits. Historically, negative media reports are actually a good contrary indicator for gold which may be forming a solid bottom. The out-performance of gold during this past month also confirms gold’s ability to act as a hedge or dampener to a portfolio which is why it is helpful to always have a small portion of gold as insurance.