I finally finish my Asia tour and return to Canada at the weekend, but seeing how this market is performing, I had to comment on what is going on. I have received a multitude of emails and calls asking me what is going on after the market panics, I reflect and react.
In my last market update, I specified that everything would be guided by tariffs: increases, retaliatory tariffs and deferrals. In the last few days, we have seen a mix of all of these, increases, retaliatory tariffs and tariff deferrals and the market has been reacting to all of these. As I have seen multiple times in my nearly 15 years in this industry, when there is uncertainty to the degree that these tariffs have brought, the reaction is panic and "throwing the baby out with the bathwater." The initial reaction was to sell everything and anything that could be sold and get into a cash position. During this initial phase, both commodities and stocks around the world plummeted as the dollar rose. All the while, as gold and silver were getting hammered, I watched the ratio of gold to silver go from 92 to a high of around 105. I stand by my position and point out that the ratio is high and that, in my opinion, silver is very undervalued.
We now see gold at record highs (again), all due to uncertainty. The market has reflected on what is happening with tariffs and has reacted by selling dollars and buying gold. This is how I explain gold and precious metals as part of a balanced portfolio.
We now see gold at record highs (again), all due to uncertainty. The market has reflected on what is happening with tariffs and has reacted by selling dollars and buying gold. Here's how I explain gold and precious metals as part of a balanced portfolio: if you buy a new car, you can't drive it off the lot without car insurance. You pay for it every month and you may never even use it, but when you have an accident it's there. This is the same mentality to have with gold and precious metals, you buy them as insurance for your overall portfolio, and when uncertainty hits (like now), it does its job. So far this year, gold is up over 23%, and the way things are going, a price of $3,500-4,000/oz doesn't seem far-fetched.
My sights are still set on silver, and I repeat once again, when the relationship corrects, silver will have a significant upside!
Josh Perez
Managing Director
Chief of Global Trading