Sunday, June 4, 2017

Despite gold and silver prices being below their 2016 highs, each has done better than the S&P 500 in 2017

With all eyes being on both cryptocurrencies and equity markets here at the halfway point of 2017, gold and silver have themselves proven to also be a positive investment despite the fact that they have not even reached their 2016 highs.  And while the three primary equity markets have all reached historic all-time highs at some point this year, it is interesting to note that both gold and silver have actually done better than the returns one would have received from investing in the S&P 500.

Since the U.S. presidential election, the stock market has remained strong, but what has surprised some financial analysts has been that the precious metals complex has been ever stronger, says Blanchard President and CEO David Beahm. 
“What is notable through the end of May is that gold and silver continue to outpace the strength in the stock market, leaving both precious metals very well-positioned for strong new rally waves if stocks turn lower in a seasonal correction phase or a bear cycle move,” Beahm says. “Typically, gold and silver perform well during periods of stock market weakness, but the fact that metals are climbing alongside the strength in stocks is notable from a historical perspective. It reveals that there is a strong safe-haven bid for metals and a desire to diversify away from stocks in the current environment.” 
The Blanchard Index 
Here’s how the market performance stacks up through late May: 
  • Gold +9.45%
  • Silver +8.13%
Yet perhaps the most important technical indicator to look at going forward between the two markets is the fact that the P/E ratios for the S&P 500 are at nearly double their historic averages while gold and silver are more than 40 and 65% respectively below their all-time highs.  And this means that the far better investment right now is in the precious metals, especially as sovereign debt levels and currencies begin to show immense signs of weakness, and underlying supplies for the metals are reaching critical levels.

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