In a continuation of the ongoing theme since the GFC, investors and high net worth individuals continue to plow their money into asset classes already at all time highs in an attempt to preserve their purchasing power. As long as central banks continue to expand their balance sheets at a record pace, we should expect this to continue. Latest beneficiary of this trend was the painting by Leonardo da Vinci, “Salvator Mundi”. The painting sold for USD $450 million, and provenance aside, is a perfect representation of how asset prices are being jammed higher regardless of value in an attempt to escape fiat currency. We expect this trend to not only continue, but accelerate.
Gold and silver represent one of the few physical asset classes that have yet to join the party. This allows bullion investors to continue to add to their position at bargain prices. Check our deals page for your best values.
The technical picture for gold in continues to look constructive, as the battle around the 100 day moving average has seen any attempt to force gold down swiftly met with heavy buying. There have been several multi-billion dollar smashes in gold futures in November, all of which have been met with heavy buying. Gold is at an interesting junction, will all of it’s moving averages bunched together tightly right around current trading levels. Another weekly close over $1290 could signal a further strong move upwards.
The European Central Bank floated a fairly ominous trial balloon in a research paper last week. The paper called for a general removal of deposit insurance protection, with exceptions to be made on a case-by-case basis. As we have been telling investors for years, your “safe” savings placed in a bank account are really nothing more than an unsecured loan made to the bank. If the bank gets into serious trouble depositors will be treated as junior unsecured creditors, and will likely be forced to take a large haircut.
Precious metals continue to represent an easily-traded physical asset that allows you to not only protect your savings from the actions of central banks, but to act as your own central bank. We find it telling that Line 1 on the asset side of the ECB’s balance sheet is Gold.