{"id":553,"date":"2020-08-17T12:36:54","date_gmt":"2020-08-17T18:36:54","guid":{"rendered":"http:\/\/gpswp.com\/ursadvisory\/?p=553"},"modified":"2020-10-02T15:48:45","modified_gmt":"2020-10-02T21:48:45","slug":"investing-in-precious-metals-in-times-of-uncertainty","status":"publish","type":"post","link":"https:\/\/gpswp.com\/ursadvisory\/investing-in-precious-metals-in-times-of-uncertainty\/","title":{"rendered":"Investing in Precious Metals in Times of Uncertainty"},"content":{"rendered":"\n
For thousands of years, precious metals\u2014silver and gold\u2014have been coveted for their monetary value and symbols of power. As you can guess, not much has changed; however, the \u201cwhy\u201d and \u201chow\u201d we might acquire these assets today have changed a bit. Precious metals can be a particularly desirable financial asset in times of economic uncertainty for their ability to help hedge against inflation and combat the weakening of the US dollar.<\/p>\n\n\n\n
Certain macroeconomic factors and fiscal policy adjustments are typically what trigger investors to move some of their investments into precious metals. These factors can include geopolitical events, such as the uncertainty over the Brexit vote and trade wars with China, the threat of war or terrorism, or oil price fluctuations.<\/p>\n\n\n\n
Today, the rise in the value of precious metals is being catalyzed by somewhat of a \u201cperfect storm\u201d economic situation. The week ending in July 16th, 30 year mortgage interest rates hit an all-time record low for the 50 years that Freddie Mac has been tracking the data, breaking the 3% threshold to sit at 2.98%. A significant spending increase and sharp falloff in revenue have caused the US deficit to breach $864 billion as of last month. This sharp rise is largely a result of the government\u2019s $2 trillion economic relief effort approved by Congress in March as the federal deficit in June of 2019 was only at $8 billion. The delayed tax filing deadline certainly didn\u2019t help to counteract that number, either. To top it off, moves by the Fed have suggested they intend to relax their 2% inflation mandate that is generally maintained to stabilize long-term interest rates and promote maximum employment.<\/p>\n\n\n\n
What has happened in response to this \u201cperfect storm\u201d? Uncertainty and the price of precious metals have been steadily increasing (Figure 1). As of Friday August 7th, gold and silver were both on the rise with silver trading over $28.32 an ounce and gold hitting over $2,034.80. Precious metal miners have also been outperforming, with extremely high numbers reported in Q1 with the Q2 numbers yet to be released.<\/p>\n\n\n\n