By John McDonald
Thanks to the ongoing turmoil surrounding Brexit and U.S.-China trade tensions, gold posted back-to-back declines early last week as investors opted to sit back and “watch what happens” before investing en masse.
This wait-and-see attitude did not extend to silver, however, which posted rising futures values.
As December futures rose 2.4 cents to $17.602 and gold declined slightly to $1,488.10 an ounce, precious metals analysts viewed the developments as largely positive across the board.
Fawad Razaqzada, a Forex.com technical analyst, remained bullish on gold and its “longer-term price structure” do to its ongoing “safe-haven appeal”.
He explained he believes “gold has been held back by the recent rally in the equity markets and selloff in bonds, reducing the appeal of the safe-haven metal.”
Silver’s role as an industrial metal as well as a precious metal has protected it from the same type of sell offs that gold experiences when stocks rise in value.
“The white metal is still viewed as a haven,” Razaqzada said. “That means it could rally alongside gold if equities see a sustained sell-off.”
Most analysts agreed events later last week would play a significant role in what happens with both gold and silver over the remainder of 2019. Consumer sentiment numbers will certainly play a major role in investor confidence, which directly affects precious metals values.
If consumer sentiment is positive, it is likely investors will surge back into the stock market. On the other hand, negative sentiment will likely lead most investors to start looking around for safe-haven options (like gold and silver) for their capital.
Another interest rate cut from the Federal Reserve could either shake or solidify investor confidence in the markets and the national economy.
That will certainly spur activity either toward or away from gold and other precious metals once the move is made and the Fed explains the rationale, if it chooses to do so.
Either way, silver is sitting pretty at the moment thanks to current “positive investor sentiment toward risk,” as Razaqzada described it. Investors buying now will also likely experience certain safe-haven characteristics with their white metal investments as well as those in yellow metal, since even if Wall Street stands strong, silver is less prone to sell-offs than gold when stocks rise.
Essentially, at the moment, silver is experiencing a “win-win” moment by many investment standards. If investor sentiment declines, then silver will benefit from its status as a precious metal investment and likely rally along with gold.
On the other hand, if investors become more confident and begin placing more capital in stocks, silver will likely also rally because its role as an industrial metal shields its value somewhat from sell-offs in that environment.