GOLD BLOWS THROUGH $2000 APPROACHES RECORD HIGH
So called experts have been calling for a correction for the last week. Gold, silver, and platinum just keep going. I understand the reasons it is moving, and I also get why many people expect a pullback. It will be interesting to see if markets react to economic data being released this week. Starting with chain store sales reports, the small business index economic optimism coming out today. Of course, I think by the time some of these numbers come out they may be irrelevant. For example, when people were polled about economic optimism gas was 70c cheaper.
Things don’t look good for the country. If we stop using Russian oil, we will be the only country cutting off the oil. Europe is not joining us. Unless we can open US gas and oil production, we will go begging Venezuela and Iran for oil. Great. Let’s finance more of our enemies.
I don’t have hope that our government will fix anything.
They want to suspend the gas tax-wow a whopping 18.4c. They want to release more from the oil reserve. Neither of these options solve anything. They are temporary fixes that I believe are just politically motivated and really won’t have any effect on the price of oil or gas. Maybe instead of everyone blaming each other they could just fix the problems for us - the American people. But don’t hold your breath.
Inflation will continue and most likely get worse. Eventually the press will get bored with Ukraine, and maybe gold dips. However, inflation isn’t going away anytime soon. I believe that some of the increase in metals prices are directly due to the war in Ukraine. There is fear that Russia could go farther than just the Ukraine and that causes a lot of anxiety.
The real story for metals is the economic repercussions that will outlast the war. It is already affecting the production of autos. Palladium is used for catalytic converters and 40% of palladium comes from Russia. Wheat has jumped 60% since Ukraine is a huge producer. Another consequence will affect produce worldwide. Russia accounts for approximately 25% of the fertilizer made in the world. So, expect everything from coffee to orange juice to cost even more.
Near term its hard to say where metals prices are going. The last two weeks have been decidedly positive with very little correction. That doesn’t mean we can’t have a dip even if prices continue higher. Everyone is at different points in life. While inflation is likely to push gold higher in the future, I also have clients who have been waiting to liquidate some of their holdings. So, whether you are adding gold, silver and platinum to your holdings or looking to take advantage of higher prices to raise some cash give us a call.
- Nick Grovich