Precious metals showed off another impressive week, with gold climbing 3% and ending at $4,340. Silver surged upwards yet again, rising 8% and right into the mid $60s. Platinum and palladium both soared upwards, both posted double-digit gains. Momentum in the precious metals markets continues as weakening labor data and currency debasement push for more and more movement into the precious metals market.
Let’s take a look at where prices stand as of Wednesday, December 17:
The price of gold is up 3% at $4,340, continuing its steady march higher.
The price of silver is up 8% on the week at $66.50. The white metal seems to have no ceiling as it rockets up into the stratosphere.
Platinum rose up 15.5% to $1,930. It’s the big winner for this week, and we think it still has more room to go even higher.
Palladium is up 14% to $1,690. The sister white metal continues to show impressive strength.
Meanwhile, looking over at the paper markets…
The S&P 500 is down about 2.5% to 6,730, softening amid weak labor data.
The US Dollar Index is down about 0.3% to 98.40 after the Fed’s interest rate cut.
Macro Backdrop: Easing, Stimulus, and a Weakening Labor Market
The fundamental backdrop looks increasingly like “pre‑crisis policy in a not‑yet‑official crisis,” which is strongly supportive for gold and, by extension, silver and the other metals.
Central banks have already executed hundreds of rate cuts globally, while Japan and China roll out large stimulus packages and the Fed quietly resumes balance‑sheet expansion (roughly $40 billion of new QE recently).
In the US, federal debt has pushed north of $38 trillion, and Washington is still debating new multi‑trillion‑dollar spending packages, especially around healthcare and subsidies.
Hedgeye’s framework has the US in “Quad 1” – rising GDP with slowing inflation – a regime that historically favors silver, platinum, and palladium performance; this lines up with the current outperformance of the white metals.
Put simply, we see governments and central banks behaving as if they’re pre‑bailing out the next downturn instead of waiting for it to be official – and that’s textbook bullish for gold and the white metals over a full cycle.
Currencies are quietly dying, and gold shows you how fast
One important thing to remember is that fiat currencies don’t need to “go to zero tomorrow” for you to benefit from owning gold; they just need to keep decaying.
For example, Japan’s debt‑to‑GDP is now above 230%, nearly double the US level around 125%, making it the leading edge of the fiat experiment. Over the last decade, gold has risen about 467% in yen terms versus roughly 312% in US dollars, dramatically illustrating how gold responds as a currency weakens long before a final collapse.
So you don’t have to be “calendar right” about some dramatic dollar reset. If you steadily hold and build a core gold position, you’re effectively stepping out of a yardstick that gets longer every year and into one that doesn’t change on politicians’ whim.
Gold–silver ratio: from crisis extremes back toward “normal”
The gold-to-silver ratio has tightened aggressively from a peak around 104:1 in the spring to roughly 65:1 now – one of the fastest compressions outside of major “event” episodes like the global financial crisis and COVID. This time, it’s driven by deeper, fundamental forces: policy shifts, inflation dynamics, and structural demand for silver and other white metals.
Historically, the ratio has fallen as low as about 31:1 (2011), so from 65:1 there is still substantial room for silver to outperform if this cycle continues.
But whether you should swap silver into gold right now depends heavily on when you bought your silver. So for example:
- If you bought silver near the ratio peaks (e.g., during the 2008 crisis, in 2011 on the spike, in mid‑2020 during COVID, or around 104:1 this past spring), partial swaps into gold are now mathematically attractive.
- If your cost basis is lower from earlier cycles, you likely want to wait for much more compression before making a big move.
Using ratio trades to compound ounces (and why “ish” matters)
Many investors lose money by trying to nail the exact top or bottom instead of following a clear ratio plan. That’s why we recommend a “compounding ounce” or ratio‑trading approach that is simple at its core:
- Accumulate the undervalued metal when the ratio is stretched (e.g., silver when GSR is above 90:1).
- Gradually swap some of that metal back into the overlooked one when the ratio snaps back (e.g., start moving silver into gold at 70‑ish, 60‑ish, and lower).
- Repeat over cycles so that each round trip leaves you with more ounces overall – without adding new cash.
And that’s why we also recommend partial moves: doing a third at 70‑ish, another third at 60‑ish, and maybe a final slice closer to 40‑ish keeps you from freezing if the market never hits your “perfect” number.
Geopolitics adds fuel to the fire
Lastly, the geopolitical backdrop has shifted in a way that historically adds a risk premium to gold.
A sharp escalation between the US and Venezuela, with President Trump ordering what he calls the largest armada ever assembled in South American history and demanding that Venezuela return “all of the oil, land, and other assets” that were “previously stolen” from the US.
This comes on top of existing conflicts and tensions elsewhere, reinforcing the sense that the 2020s are not a period of geopolitical calm where you can safely rely on paper assets and low volatility.
For precious metals investors, geopolitical risk is less about predicting specific outcomes and more about recognizing that these episodes push governments toward even more spending, money printing, and intervention – all of which tend to strengthen the long‑term case for gold and, in this phase of the cycle, for silver and the white metals as well.
Make Your Move
The team at McAlvany Precious Metals has a collective 75 years experience investing in the precious metals market. We are happy to speak with you about your goals on a no-obligation, complimentary consultation. Reach out to us at 800-525-9556.
