Metals Minute 180: Gold is safer than treasuries
In the middle of a worldwide banking crisis, we have all the metals up markedly for the week. Safe-haven gold is up 5.9% to $1,931, while silver is 8.7% higher to $22.00. Platinum is up 2% to $972, and palladium is 6.7% higher to $1,497.
Since a year ago today, gold leads the way up 1%, silver is 11.7% lower, platinum is off 2%, and palladium is 38% lower.
One thing people are beginning to realize, both in the banking sector and elsewhere, is that US Treasury securities are not risk-free. That’s not to say they are at risk of not paying their stated interest, as I am certain they will pay it. But recent interest rate increases on new debt have dropped the value of existing treasuries to half in some cases. Losing 30-50% of market value on U.S. Government bonds has left many banks undercapitalized, as evidenced by the FED’s emergency announcement of a new $45 Billion backstop fund to help strengthen bank balance sheets.
Consensus estimates suggest an interest rate increase of 0.25%, followed by rate cuts totaling 1.25% by the end of this year. In other words, expect the rally in precious metals to continue.