Rising prices for precious metals and falling long-term rates will go hand in hand.
Ninety-six months (8 years) have passed since gold and silver mining stocks last bottomed (at $12.40 on January 19, 2016 for GDX, VanEck Vectors Goldminers, For example). Since then, metals have started a long upward movement (long progression, without any new low being reached for decades, which has nothing to do with a continuous upward trend occasionally accompanied by new highs). In this respect, raw materials, and in particular precious metals, differ completely from stock market indices: much more irregular, their rise sometimes gives the impression of not being one. However, the first wave of increases lasted until the summer of 2020 (peak: August 5). The GDX then came close to $46, a surge of 369% in 4.5 years. At the time, it was euphoria. Or believe that “the only way is up« is very dangerous in the investment sphere. And it did not, in fact, fail: the two years of decline that followed transformed the feeling into despair, especially since in addition to being long, the descent was profound. The bottom, at approximately $22, was reached about a year ago. But the second wave of increase, which has begun discreetly since then, took the GDX to more than 36 dollars on May 5; The ETF is currently hovering between $25 and $26, which should roughly be its bottom.
Rise in sight
Fireworks are coming – it’s not because the tracker has lost more than 20% since its intermediate high as the long upward movement is broken. As long as the threshold ($22) reached last year is not breached, we could witness a surge over the next two years, with the initial objective of $46 recorded in 2020. Whatever we say, the market long-term bullishness of precious metals is still very much alive and could reserve some very nice surprises – international geopolitics, inflation, the desire of certain authoritarian regimes to no longer accept the dollar as a reference currency, the debt pandemic (which was not a problem as long as rates were low…) could indeed help fuel the rise for the rest of the decade.
In the short term, it is the decline in long-term rates which will have to act as a catalyst. The rates were, let us emphasize, the factor which has prevented precious metals from progressing in recent months. The underlying indicators show it: gold and silver have finally bottomed out and are poised to soar for a year or two. This rise should occur as soon as long-term rates reach an intermediate peak.
2024-02-19 13:50:11
#Precious #metals #ready #climb #Trends
