Investors Buy the Dip as Gold and Silver Correct!

Precious metals markets firmly entered correction mode this week, with gold and silver both falling significantly.

Since their highs in mid-April, both gold and silver fell by close to 10% in USD terms, though they have since bounced, with the current decline from the prior peak currently sitting at close to 5% for both metals.

Silver likewise has seen a near textbook correction.

Clients at The Victoria Bullion Exchange have been aggressively stepping up their purchases in response to the recent market moves, with many treating it as a buying opportunity.

Market News

Given the recent gold and silver price surge, and subsequent correction, it is no surprise that precious metals have been front page news, while precious metal market commentators have been sharing their views on the price action. This includes;

• An update from Schroders, who correctly (in our view) pointed out that gold is trading like a monetary asset, not a commodity, in the current climate, with James Luke, a fund manager at the firm, stating that gold’s fundamentals, which were already positive, were being supercharged by the Trump administrations desire to talk down the role of the USD as the global reserve currency. Luke went on to suggest that a USD $5,000 price point by the end of the decade may now be conservative.

• Charlie Morris of Atlas Pulse also published an update on the gold market, noting that ‘the gold trade’ is not as hot/overbought as many are claiming.

• Hedge Fund manager David Einhorn also talked up gold’s prospects recently, looking at the deficit and debt (and almost by definition inflation) angle of the market. He also noted that a moon-shot in prices would not make him happy, even though he is obviously bullish.

Last but by no means least, Ronald Stoeferle and the team at Incrementum released their annual ‘In Gold We Trust Report.’ First published back in 2007, it remains a must read for those passionate about understanding the case for gold and silver, and how they can help protect and grow wealth.

What happens next?

History would suggest investors that are adding to their holdings during this corrective period in gold and silver are likely to be well rewarded in time, with the last twenty-five years (a time period in which gold has basically risen ten-fold) seeing many cycles in which gold in particular has;

• Rallied sharply and delivered exceptional 1-year returns of 40% or more, then

• Pulled back from that strong rally, with the metal often falling by 10-15%

  
  

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