Podcast: Play in new window
Gold and silver rose up this week, while platinum slid off a new high and palladium remained flat. Let’s take a look at where prices stand as of our recording on February 19:
The price of gold is up 0.6% at $2,935. However, gold was as high as around $2,947 this past week, so we did see gold put in a new all time high.
The price of silver is up 1.4% on the week at $32.77. Silver got as high as about $33.40 this past week. So silver had a pretty strong week out doing gold by a little bit and bringing that ratio back under 90, currently sitting at around 89 to one.
Platinum is down 6.3%, but we did start our week last Thursday at the October high of $1,053, so Platinum had a pretty strong week last week ending on Thursday at a multiple month high.
Palladium is flat at $990. But it did go as high as $1,035 during the week and at one point was up about 5%. So there’s some consistent movement up in both platinum and palladium.
Looking at the broader markets…
The S&P 500 is up 1.3% to 6,143, putting in a new all time high. It has a beautiful stair-step chart.
The US dollar is down about 0.5%, sitting at $107.01, confirming the downtrend in the purchasing power of the US dollar right now.
Given what’s going on in the precious metals market this week, we need to talk a little bit about supply and demand.
Gold Leasing in Demand
There’s a renewed interest in gold leases among large institutional investors.
Here’s how gold leasing typically works: Exchange Traded Funds (ETFs) will lease gold for a period of time depending upon the money that’s flowing into their exchange traded funds. Market makers such as big corporate dealers will borrow gold for a year to capitalize their operation.
Less than three months ago, institutions could borrow gold for close to 0% interest per year, and borrow several tons of gold at less than 0.5% – 1% per year cheaper than getting a bank loan. But now, gold lease rates are anywhere from 3% — or perhaps at 2% if you just borrow it for six months.
More money is flowing into gold ETFs from Europe and Asia. But you can’t say the same about US investors.
Americans Still Betting on Crypto
Americans see it differently — their money is skipping the ETFs and going into cryptocurrencies and Bitcoin.
With the new administration shaking things up, and with DOGE uncovering corruption, US investors are feeling more confident. So instead of putting their money in a real and tangible store of value like gold, they are willing to bet big on the uncertain cryptocurrencies.
The only problem? The American public still hasn’t caught on to the fact that the price of gold is going to go so much higher.
The smartest wealth builders are quietly adding more gold ounces — serving as the insurance portion that will protect their purchasing power from being eroded by inflation. And the way the US government has been running up debt, inflation is inevitable.
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