Dollar Weakness Growing

McAlvany Weekly Commentary

It’s been a strong week for all the precious metals. So let’s take a look at our weekly recap of the precious metals markets for August 21. As of this recording, here is where precious metals stand: The price of gold is up over 2.3% to $2,511, after hitting a new all-time high of $2,530. The price of silver is at $29.60 or up 6.5%, which is a big run-up from a week earlier. Platinum is back up to $966, an increase of 4.1% from the previous week. Palladium is up $936, a rise of about 1% from a week earlier. The S&P 500 is up 1.4%, a pretty reasonable move up over the last week. The dollar index is down at $101.20, losing a little over 1% this week. Rate Cut Expectations The Federal Reserve of Kansas City will meet for its annual Economic Policy Symposium from August 22-24, focusing on lessons learned from the response of monetary policy to the pandemic and subsequent surge of inflation. The markets are waiting in anticipation for hints of a September interest rate cut in Jerome Powell’s remarks, due on Friday. With this rate cut expectation, the dollar is down at $101. The economy has slowed down. The BLS is expected to revise its job growth report down by up to 1 million fewer jobs than initially reported. As a result, equities are holding steady, and Bitcoin is up 2.5% to over $60,000 as of this recording. Stability of Gold It can be hard to predict where gold will move next when the price of gold is breaking through to new high levels. Taking the big picture view going all the way back to August 1971, gold has equaled the return of the S&P 500. While some Wall Street analysts may joke about gold as a dead asset, it is anything but that. Instead, gold is a solid like a rock — an asset that provides stability in an unstable geopolitical environment and uncertain economy. The Silver Lining As it’s been said before, whatever gold does, silver can do better. Silver has been playing catch up with gold, up over 6% this week. However, the white metal is still technically bearish. Even though it has had a strong move up, it started from the bottom. Anything over $30 would be a better indicator that silver is closer to being out of bearish territory. Making the assumption that silver being the kid's sister to gold, it takes a little bit longer to get going. But once it gets its engine cranked up, it moves pretty quickly. There’s news that silver is being used in a new type of battery, and that it requires about one kilo of silver per battery. This new battery has the potential to change the demand for silver. The bottom line: silver is still undervalued and poised for a breakout. So investing in silver now could set up investors for a lucrative gold to silver ratio trade in the future. Get in Touch Now is the time to reach out to a trusted McAlvany advisor for precious metals investing advice. They are happy to speak with you about your investment goals and strategy for investing in gold and other precious metals. Reach us at 800-525-9556