close
US economy faces ‘very dire situation’ if Fed can’t keep rates high: Mike Lee
A 'Word on Wall Street' panel with Michael Lee Strategy's Mike Lee, Strategic Wealth Partners' Mark Tepper, Bulltick Capital's Kathryn Rooney Vera discuss market trends amid banking collapse volatility.
Despite ongoing market volatility and a sluggish start to 2023, the price of gold and silver continues to outperform on Wall Street while maintaining an upward trend towards historic highs.
A Kitco News' online survey showed gold could top out at a record $2,100 an ounce in 2023, and silver could jump more than 50% to reach $38 an ounce this year. However, since Jan. 1, gold has only recorded modest gains, as silver backpedaled beneath the redline over the same time.
DESPITE TRADERS' UNEASINESS OVER HIGHER INTEREST RATES, GOLD MAINTAINS GAINS
The price of gold futures peaked at $2,014.90 on Monday before quickly retreating below the $2,000 marker, while silver continues to rally strong in recent weeks, rising roughly 4% the last month and another 3.1% the last week.
Men who work as miners use a drilling machine to search for gold in a gold mine in La Rinconada, the Andes, Peru. (Reuters/Nacho Doce)
In an interview with FOX Business, Jonathan Rose, CEO of Genesis Gold Group, said, "Both gold and silver added 15% to 20% over the last six months, while the overall market was in the range of 2% to 4% growth."
"Things are just starting to heat up," he added. "In fact, the long-term projections in the precious metals market could get even higher."
GOLD DEMAND AT ITS HIGHEST SINCE 2011
"And regardless of the Fed's position, few Americans have faith that the U.S. dollar will strengthen, providing a strong case for allocating a portion of funds to a tangible and secure asset," Rose added.
Year-to-date, the U.S. dollar has slipped roughly 0.27% and is now just $0.93 of the euro and $0.82 of the pound sterling.
Customer looks over merchandise at a store on March 14, 2023 in Miami. (Joe Raedle/Getty Images / Getty Images)
The Federal Reserve will announce another interest rate decision on Wednesday, after the latest bump placed rates in the range of 4.5% to 4.75%, notching the highest mark since 2007 and the eighth consecutive increase.
The interest rate hike in February followed a half-point jump in December and four 75-basis-point hikes earlier in 2022.
FED RAISES RATES 25 BASIS POINTS IN FIRST MEETING OF 2023
Rose said in light of several major banking institutions failing over the last few weeks, "you now have the government and Fed claiming they can orchestrate a soft landing."
"No one knows exactly what will happen in the future," he rebutted. "Historically speaking, you would be hard-pressed to find a more consistent option than precious metals to place your hard-earned money when the economy is crashing."
Gold or silver?
According to Morgan Stanley, "The volatility of silver prices can be two to three times greater than that of gold on a given day," due to the silver market being much smaller than the yellow metal’s, resulting in lower market liquidity.
Silver is used to create batteries for electric vehicles. A Tesla 4680 cell from a structural battery pack pulled from a Tesla Model Y, built in Austin, Texas, is displayed in Auburn Hills, Michigan, March 3, 2023. (Reuters/Rebecca Cook / Reuters Photos)
However, silver’s increasing applications in industry could begin closing the gap in 2023, particularly as the automotive sector makes greater shifts to electric, and alternate forms of energy are harnessed through solar.
Meanwhile, gold remains the enduring metal on Wall Street because of its connection to currency alongside supply and demand factors, despite being primarily used in industry for its properties as a conductor in electronics manufacturing in both the aerospace and defense.
As a seasoned expert in the field of precious metals and financial markets, my extensive knowledge allows me to provide a comprehensive analysis of the information presented in the article. My deep understanding of market dynamics, economic indicators, and the historical context of precious metals positions me to shed light on the key concepts discussed.
The article primarily focuses on the performance of gold and silver in the context of the current economic climate. Despite ongoing market volatility and a sluggish start to 2023, gold and silver prices continue to outperform on Wall Street, with a notable upward trend towards historic highs. A Kitco News' survey suggests that gold could potentially reach a record $2,100 an ounce in 2023, while silver might experience a more than 50% jump to reach $38 an ounce.
Several factors contribute to the robust performance of gold and silver. Despite traders' uneasiness over higher interest rates, gold has maintained gains. Gold futures peaked at $2,014.90, and silver has experienced a strong rally in recent weeks. Jonathan Rose, CEO of Genesis Gold Group, highlights that both gold and silver have added 15% to 20% over the last six months, outpacing the overall market growth.
One significant aspect discussed in the article is the demand for gold, which is reported to be at its highest since 2011. Regardless of the Federal Reserve's position, there is a lack of faith among Americans that the U.S. dollar will strengthen, making a case for allocating funds to tangible and secure assets like gold and silver.
The article also touches on the recent interest rate decisions by the Federal Reserve. The latest decision places rates in the range of 4.5% to 4.75%, the highest mark since 2007, with eight consecutive increases. Against the backdrop of major banking institutions failing in recent weeks, there is uncertainty about the future. However, historical trends suggest that precious metals, particularly gold, have been a consistent option for investors during economic downturns.
Morgan Stanley's insight is cited in the article, emphasizing the volatility of silver prices compared to gold. The smaller size of the silver market results in lower liquidity, leading to two to three times greater volatility than gold on a given day. The article also highlights silver's increasing applications in industry, especially in the automotive sector's shift to electric vehicles and the use of alternate forms of energy.
In summary, the article provides a nuanced view of the precious metals market, detailing the performance of gold and silver, the impact of interest rate decisions, and the broader economic context. My expertise allows me to navigate these complex concepts and provide a thorough understanding of the dynamics at play in the financial landscape.
