Wall Street Silver: This Is Why Gold Is Not Performing… Yet!
Investors have been looking for ways to protect their portfolio from inflation. Over the past few years, supposed inflation hedges like precious metals have failed to live up to their potential in that regard.
The metal is slightly down for 2022. The returns have been slightly better than the stock market. Even better, the metal has held up better than other potential inflation hedges, such as cryptocurrencies. But there may be factors that could cause precious metals like gold to move higher.
Gold has broken out near the end of the year, moving from around $1,660 to $1,800 in just a few weeks. That’s a notable run for the metal. However, the run is missing a few key confirmations.
That includes the lack of a breakout in silver, which tends to move higher with gold. And the S&P 500 also isn’t confirming the breakout. That suggests that the metal isn’t moving higher, but is simply retesting its old high.
One reason for that may be the slowing economy. Investors have become increasingly concerned over slow economic growth as inflation has finally started to show signs of a decline.
Over the past year, precious metals have continued to make lower lows. That’s in spite of the occasional jump higher like the move in recent weeks.
It will take a change in market conditions for precious metals to start moving higher. Once that happens, however, precious metals have a chance of substantially outperforming the market.