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Smart Money - Precious Metals

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Looking at the trends for Precious Metals right now with the Hurricane and North Korea missile launched then it seems the smart money is going into Precious Metals. Gold, Silver, Platinum and Palladium are performing as one would expect. There may be a short term play here where profits can be made. 

 

What will be interesting is how Bitcoin performs now with the news that North Korea launched missile. Last time around it shot up. Lets see what happens. There is a nice trend on Copper too! The doctor is performing. 

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I am replying to my own post as Gold and Silver have declined slightly from yesterday's high. I think looking at historical price action and when the facts are presented it demonstrates that Cryptocurrencies are behaving like safe havens more than Gold. The 'big boys' don't want to put big money into something that the Governments can control or manipulate. 

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Palladium has been outperforming all the other precious metals by quite a distance. Yes the margin requirements are higher but the performance has been higher too! The spread is not actually that bad either on it.

As I have stated in many occasions a long term upward trend can last a lot longer than one expects. Palladium has a unique benefit in that it is a precious metal that can go up during time of crisis but also it has important industrial uses which means when economies are doing well, their stock markets are doing well in the shape of equities / indices then  Palladium can too perform well. 

Platinum has been the weakest and Gold and Silver seeming to be at the beginning of their journey to possibly join Palladium but I do not think Palladium is about to give up its crown as 'Top Dog' anytime soon. 

From an investment portfolio perspective, I would want to start considering shifting a small allocation from equities into Precious Metals and Bonds and think about rebalancing based on Brexit consequences, recessions in certain EU Member States such as France and Germany and the US!

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It seems that Gold, Silver and Platinum followed similar price behaviour yesterday.

Was it because of the US Government re-opening albeit temporarily? We would certainly like to think so and convince ourselves that every significant price action is based on some form of news which we can relate to the price action. There will be many times when this is the case. However, there are times when positions are being built and prices are moving without any specific news that has been released by the media. 

Previous metals are a very interesting asset class within the Commodities asset class and within the metals asset class. They have industrial uses but are historically known to be used as a hedge against uncertainty in the economies around the world. Interest rates and inflation can play a key part in the portfolio allocation of precious metals and the likes of bonds.

There is also another factor which affects the prices of precious metals. That is demand and supply. How much demand is there and are there any supply issues and these can cause sharp moves either upwards or downwards in precious metals. Mining strikes, wars, serious supply issues when there is large demand, etc.

There could be a rally in precious metals which lasts a year or two and what we are seeing since August 2018 is merely the beginning. One must remember that trends can last a lot longer than one thinks. 

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A bullish narrative is presenting itself for Precious Metals.

I think we have witnessed large institutions beginning to reposition their portfolios by increasing their allocations towards Precious Metals.

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