Swiss America Trading Corporation

It's Time To Give Silver A Second Look

Gold last traded at $1,250 an ounce. Silver at $14.85 an ounce.

NEWS SUMMARY: Precious metal prices rose Wednesday on safe haven buying and a weaker dollar. U.S. stocks traded higher as investors digested upbeat news related to the ongoing trade war between the United States and China.


Jerome Powell Is Between A Rock And A Hard Place -Daily Reckoning
"Fed Chairman Jerome Powell has recently indicated again that he planned to go ahead with another 0.25 rate hike when the Fed meets Dec. 19, which would be the fourth increase this year....What has emerged is a growing fear that the future could be gloomier than many analysts, governments and central bank leaders anticipated. There are now two major factors that could curtail growth in the U.S. One is the Federal Reserve itself. If the Fed were to continue raising rates too quickly, it would cause government, corporate and consumer debt payments to increase. Second, while President Trump's estimated $1.5 trillion in tax cuts have contributed to boosting U.S. GDP this year, the same impact is unlikely to carry on into next year....The Wall Street Journal reported the Fed is mulling whether to 'signal a new wait-and-see mentality' on interest rates at their upcoming meeting in less than two weeks...The fact is that markets remain addicted to low interest rates and central bank credit. But that just keeps the Fed trapped in a catch-22. It wants to 'normalize' rates as much as possible after years of heavy support to the markets, but it's now seeing how markets react without that support. The Fed can tolerate weakness in the stock market, but it fears a complete collapse, which is a very real possibility. So Jerome Powell is between a rock and a hard place."


Time To Give Silver A Second Look -Seeking Alpha
"Silver prices have been battered on the backdrop of a higher US dollar, higher US Treasury yields and Fed rate hikes. The key question one might ponder would be where silver prices will be heading going forward? A more dovish tone from the Fed will presumably lead to limited upside potential for the US dollar coupled with the fact the net speculators are already heavily long US dollar. Furthermore, considering the tailwinds from fiscal stimulus fades, US growth is likely to slow into 2019 and the comeback of twin deficit worries suggest that US dollar currency appreciation will likely to reverse. Hence, given the inverse relationship between the US dollar and precious metals prices. A weaker USD will bode well for precious metals specifically silver bullion moving forward....From a Gold/Silver Ratio perspective, silver at present looks attractive with the ratio currently standing at 86.93 all-time high as shown below. The ratio between the two metals shows how many ounces of silver it would take to buy one ounce of gold, currently standing at 86.93 all-time high. The all-time low ratio was 13.76 back in the Jan 1980. As the saying goes, what goes up must come down. Hence, the upside potential for the Gold/Silver Ratio seems limited and the bottom line is that the current ratio signals that silver remains significantly undervalued which deserves a second look from investors."

gold silver chart

We agree! Based on historical evidence, silver is poised for a big upward move. The extreme gold-to-silver ratios in 2003, 2009 and 2016 all signaled a major rally in gold and silver prices within a few months. Although past performance is no guarantee of future performance, most experts agree that adding some silver to your portfolio right now, in addition to gold, has a higher than average probability of growth in the coming year.


"Bear Markets Everywhere": Over Half The World Is Now Down 20% Or More -Zero Hedge
"SocGen's Kit Juckes writes this morning that 'a week ago, market sentiment was optimistic after the G20 meetings in Buenos Aires. That's a reminder not to read TOO much into Monday morning markets!' Picking up on this, another SocGen strategist, Andrew Lapthorne, writes that 'having bounced back strongly post-Powell, equity markets slumped last week as the mood turned decisively bearish.'....Putting the ongoing carnage in context, stock-wise 52% of MSCI World companies are down by more than 20% from their 52-week high, but only 38% of the market cap....As 2008 taught us, when faced with a liquidity crunch, asset managers will paradoxically hold on to their losers in hopes of getting better prices, while dumping winners. Which is why all those traders who have stoically waited for the past ten years for a renaissance in value stocks may finally enjoy a moment in the spotlight, only to suffer an even bigger hit in the coming months if the global economy is indeed about to sink into a market-crushing recession or worse."


Gold buoyed by prospects of slower Fed hikes -Marketwatch
"Gold edged higher Tuesday...as investors scaled back expectations about the pace of future interest-rate increases by the U.S. Federal Reserve. 'Gold prices, a barometer of economic and political news, are awaiting [the] Fed meeting Dec. 18-19 on rate hikes, which could have more dovish language and cautious approach to future hikes,' said George Gero, managing director in the senior consulting group at RBC Wealth Management. 'Brexit turmoil now also may be helping gold as a haven as postponing the vote is a sign of more headaches and headlines,' he added in a daily update. On Tuesday, global currencies were driven by news on the trade front. The U.S. and China have kicked off a new round of trade talks. That helped to lift some risk-sensitive currencies against the U.S. dollar."


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