It has been a “sale week” for the metals, with gold off 1% to $1,974, silver down 3% to $23.37, platinum down 5% to $1,040, and palladium off 8% to $1,446.
From a year ago today, gold is up 6%, silver is also up 6%, platinum is 10% higher, and palladium is down 28%.
Part of the reason for the recent downturn is related to higher interest rates on short-term US Treasury bills.
1-month yields are at 5.65%, a multi-decade high. Ironically, the uncertainty about US solvency related to the debt limit has caused interest rates to rise, temporarily strengthening the dollar against precious metals. Should there be any type of default that actually occurs, precious metals will be the obvious winner.
One thing to keep an eye on is the precipitous drop in palladium prices. Palladium has a track record as a precursor to economic activity and stock market direction. Palladium might be warning us of an impending stock market drop. Such conditions are often less traumatic for precious metals investors vs. investors focused on paper investments.