(Chart source, goldprice.org)
Prices took a beating at the opening of the week, with the most severe trading action taking place throughout Tuesday, which saw the price of gold bullion shed 4% of its price, a heavy, however very temporary loss to those who plan to hold for the longer term and who are not simply gambling on prices.
This move lower, which followed on the heels of Fridays strong jobs data report within the United States, was made worse predominately due to Treasury yields ticking higher in price, with the 10-year Treasury note yielding 0.658% on Wednesday, up from 0.562% at the end of last weeks trading session.
This caused a sell off in precious metals, due to a Treasuries being viewed as a "alternative" to gold and silver bullion, with some thinking it a wiser "safe-haven" asset than bullion.
This is a common trend, as precious metals typically move higher in price, the lower yields go.
(Chart source, silverprice.org)
As can be seen from the chart above and as previous noted, silver bullion experienced the same reaction as gold bullion, moving sharply lower off of the back of Treasury yields moving higher.
This in my personal opinion is akin to jumping "out of the frying pan and into the fire", as Treasury yields are just one more, illusionary, artificially maintained fiat paper asset, that is not tangible and can be taken away at a moments notice. Which is in stark contrast to physical precious metals that you have taken personal possession of.
Precious Metals Begin to Rebound
Even though the trading action throughout the week has been brutal, with precious metals owners getting put through their paces, this short term correction already appears to be reversing course throughout today's trading session, as seen from the charts above, with both gold and silver bullion moving off of their lows and regaining some of the losses experienced in the previous few days.
As I stated last week, this is not all bad and a correction should not only be expected, but welcomed, as we want a steady, accumulative move higher, rather than a parabolic one.
A bull market that experiences regular corrections lower is good, as it will lead to a much more durable price trajectory and not a "blow off" top, that eventually implodes in upon itself, such as what was seen throughout the bitcoin mania, that eventually suffered an outright collapse.
This will also encourage more and more strong hands to continue to surf the wave of higher prices, without the faith of those who cannot stomach extreme volatility being shaken off in the process of erratically moving prices.
This strength will ultimately lead to much higher highs, as many other precious metals experts are predicting, such as Peter Schiff and James Rickards, who made a stunning $15,000 per oz gold price prediction in a recent joint interview.
Additionally, wild estimates of $1,000 per oz silver prices are now being predicted, which may seem unrealistic based on today's prices, but is truly a possibility if the system continues down this unsustainable path that it now finds itself on, with ever increase fiat money printing and debt creation.
The reality of the situation is that the system can only take so much abuse.
Throughout history, debt to GDP ratios the likes of which we are now seeing in almost every Western Nation have resulted in complete and utter collapse, with systems eventually buckling under the incredible pressure that results from such high, unsustainable debt loads.
Add into the mix the ever growing geopolitical and social unrest that we are now experiencing the world over, with COVID-19 making matters even more untenable, then we have a true recipe for disaster brewing.
The winners in the end, as they always have been throughout mankind's financial history will be those who prepared accordingly, acquiring physical precious metals in advance and when they were able to at reasonable prices, mitigating the financial damages caused by the ensuing financial collapse.
The question is, are you prepared?
Keep Stacking.
- Source, Nathan McDonald via the Sprott Money Blog
