Precious metals markets got hammered earlier this week as interest rates continued their relentless march higher.
The 10-year Treasury note recorded its highest yield since 2007. Meanwhile, the average conventional 30-year mortgage rate surged to 7.31% – a level not seen since 2000.
Higher rates are putting pressure on housing and financial markets. They are also hitting consumers and small businesses. For now, though, the economy hasn’t entered into a recession – at least not officially.
But the Federal Reserve seems intent on keeping interest rates elevated until something breaks in the economy. Any incoming bad news will likely be good news for precious metals markets, which may now be entering oversold territory.
As of this Friday morning recording, for the week, gold prices are down 3.7% to trade at $1,865 per ounce. The silver market shows a weekly loss of more than $1 or 5.1% to bring spot prices to $22.55 an ounce. Platinum is off 0.8% since last Friday’s close to come in at $925. And finally, palladium is outperforming the other metals and is essentially unchanged for the week to trade at $1,291 per ounce.
Investor interest in gold and silver has languished in recent months as prices have failed to break out and remained mired in trading ranges. Of course, investors who are aiming to accumulate bullion should welcome soft market conditions. They make for favorable buying opportunities.
This week’s selling did motivate a good number of bargain hunters to place orders for bullion. Money Metals saw increased activity from large precious metals purchasers in particular.
It’s now a buyer’s market for gold and silver. In addition to reduced spot prices, premiums on coins, bars, and rounds have also trended down. In fact, they have reached the lowest levels since early 2020.
It is possible that spot prices could head lower still in the days ahead. It’s also possible that a big Fall rally is just getting underway.
Investors who want to wait for bullion to get cheaper before buying risk never being able to buy because spot prices never become cheap enough.
Buying and holding during a major bull market is the surest way to profit from it. And the surest way to avoid regrets over purchase prices is to buy in increments over time.
Investors can protect themselves from the risks of being on the wrong side of up, down, or sideways markets by simply adding to their positions regularly, regardless of price.
This strategy is also known as dollar-cost averaging. And Money Metals’ Monthly Savings Plan makes it easy for bullion investors to implement. Just Choose the monthly dollar amount you wish to invest, which can be as little as $100, or the monthly number of ounces you want to buy.
By exchanging depreciating U.S. fiat currency for sound money regularly, you’ll have good odds of coming out ahead over time in terms of purchasing power.
Heading into the weekend, all eyes will be on Washington, D.C as the deadline for avoiding a potential government shutdown looms. The political melodrama may make for compelling headlines. But investors shouldn’t be distracted by them.
Yes, some agencies could temporarily close their doors. Some federal workers may worry about getting their paychecks on time. But after some sort of bipartisan deal is inevitably reached, it will be back to business as usual.
Government shutdowns and debt ceiling showdowns now occur on a regular basis. They grab headlines and motivate activists on both sides of the nation’s political divide.
But they change nothing – at least when it comes to the trajectory of federal finances. Government spending doesn’t get cut. The deficits don’t shrink. The Treasury Department doesn’t default on bonds. And the Federal Reserve continues to print currency in excess.
It’s ultimately the monetary system that enables politicians to continue kicking the can down the road. And the consequences of fiscal recklessness will ultimately be reflected in the continued decline of the Federal Reserve note’s purchasing power.
Well, that will do it for this week. Be sure to check back next Friday for our next Weekly Market Wrap Podcast. Until then this has been Mike Gleason with Money Metals Exchange, thanks for listening and have a wonderful weekend everybody.
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