I think it’s 60% “strong dollar” and 40% “stocks to the moon” since every nation on earth is engaged in QE, even if we have ceased.
Anything you hear on the radio is BS. Period.
There is the discussion as to extraction/production costs as these metals; and, whether market prices should be this much or that much over production costs. Certainly, gold/silver prices should fall as fuel falls. Certainly, Au/Ag prices will fall as the USD strengthens. It is *possible* that other nations (and the people in them) will seek protection from declines in their currencies...by buying USDs in some cases, and once they have done that, they may buy gold or, US stocks.
Frankly, I believe that gold prices are much closer to production costs than silver prices. I think these items are much closer to bottoms than tops (that is the only opinion I have) but *IS THERE* a demand that is going to come along and make them pricier in times to come? I don’t know nor do I have an opinion. I am quite neutral on the sector. Hey, maybe the dollar weakens and they start upwards as measured in how many USDs it takes to buy them. I think silver is going to be troubled going forward because higher prices inevitably bring out supply; more so than gold. IMO, silver has gone lower than 95% of silver bugs thought it would, and believe me, I’ve had some very loud and vociferous arguments with plenty of weasels who try to sell me silver every other day. The truth is, nobody can predict the future. I think ALL world markets are somewhat spooked by the drop in oil and do not know quite what to make of it; whether it’s strong dollar or Euro recession. I can cite these factors without being able to construct a simple cause and effect relationship.
But I think that as investments, gold and silver go nowhere for a very, very long time. And higher rates do not IMO help them, as they have implied storage costs yet spin off no interest. As things that make you feel better holding them, fine, that isn’t addressable on an objective basis, IMO. You want ‘em, buy ‘em. They’re pretty cheap. There is no shortage. maybe Eagles are scarce but at the point where you paying $4 = 25% over face (that you will probably only get $2.50 or $3 for when you sell them, in other words, there is a built in 6-15% hit) there is only very slim justification for buying them when it’s not that feasible that stocks take a 25% hit (though they certainly could) and stocks just recently blasted away a 10% correction in 2 weeks.
Thanks for your time in posting this. I have learned a great deal. But if the strength of a national currency is based upon more than popular confidence/lack of panic, i.e., stable economy, production & cash flow, then are things as bad as the gold bugs argue? Is the yuan going to replace the dollar as a medium of foreign exchange? Only the mullahs in Iran hope so.
If things really aren’t as bad as all that, doesn’t the prepper movement start to look uh, kooky? Not talking about laying in supplies in case of natural disaster.
For example, food producers & the system that brings their goods to market are interested in their own economic survival. There’s symbiosis for all participants.
Hope this does not seem too Pollyannish.