1st American Reserve Blog

Gold still leads all other major investment asset categories through the end of May, although stocks have made a strong comeback in April and May. Gold is up 15% year-to-date vs. double-digit declines in the Dow Jones Industrials and European stock market, while the widely-quoted S&P 500 is down 8.3% and the tech-heavy NASDAQ composite has delivered a positive performance of just +5.76% through May 31.

The Wall Street Journal U.S. Dollar Index is up 3.3% through May 31, meaning gold has performed an average 3.3% better in global currencies than in dollars. Gold is up over 20% YTD in the Canadian dollar, Indian rupee or British pound, and gold is up over 50% in a troubled currency like the Brazilian real.

The biggest story in the precious metals market during the second quarter, so far, is that silver came back from $12 in mid-March to $18 in a little over two months. At one point, the gold-to-silver ratio spiked to 130-to-1, when silver dipped to $12 on March 19 while gold traded at $1,560. That was also the week of maximum panic in the stock market when gold was the only asset that held its value. Silver has now risen 50% in a little over 10 weeks based on rising industrial demand and rising investor demand.  The current gold-to-silver ratio has now dipped to 95-to-1, the first time it has been below 100-to-1 since mid-March.

Also, since March, we have predicted that silver would catch up to gold, and now it has. The average gold-silver ratio during 2019 was about 85-to-1, and that is probably where the ratio will soon “normalize.”