Blanchard Index

Exclusive Precious Metals Outlook and Recommendations

Index updated April 1, 2021


Blanchard's Monthly Index

The Blanchard Monthly Index is a roll-up of industry news and economic trends affecting the precious metals trading world.

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The Blanchard Economic Report

One of the Greatest Losses of Personal Wealth in History

You may be familiar with family offices, which manage wealth for individuals and families.

Historically staid and conservative, family offices are now wading into riskier and unregulated territory – and are sadly vulnerable to collapse. We saw this in late March with Archegos Capital Management.

Family offices aren’t small potatoes. Indeed, a mere 121 of the largest family offices represented a total net worth of $142.4 billion, according to a 2020 UBS Securities Report. As family offices have grown – they are embracing riskier investment strategies.

Case in point – the huge losses registered by the Archegos family office who managed funds for Bill Hwang. In late March, Archegos and its banks were forced to liquidate and Bill Hwang lost $8 billion in just 10 days.

Yes, that’s right. The family office lost $8 billion of Mr. Hwang’s money.

“I’ve never seen anything like this — how quiet it was, how concentrated, and how fast it disappeared,” Michael Novogratz, a Wall Street veteran and ex-hedge fund manager told Bloomberg News. “This has to be one of the single greatest losses of personal wealth in history.”

While the financial system didn’t crumble during this massive unwind – it shows that the entire stock market is pumped up on risky strategies, and that overall margin debt is at very high levels. And, the activities of family offices aren’t subjective to the same oversight as the banking world, which is a worrisome sign indeed.

Wake Up Call for Wall Street?

While there are new regulations in place after the 2008 Global Financial Crisis – the tougher rules are pushing riskier investing strategies into the shadows of the banking world – like at family offices where there is far less disclosure required.

Wealth in the Stock Market House of Cards can disappear – in an instant – or in the case of Bill Hwang – $8 billion gone in 10 days.

This reveals another time-honored investing lesson – if you don’t understand an investing strategy – it is probably one you should avoid.

The Safety of Gold Shines Bright

Amidst the risky, complicated and backroom investments occurring in today’s liquidity fueled stock market run, physical ownership of gold bullion shines like a beacon of safety in a storm.

Never before has the safety and security of ownership of tangible assets like gold and silver been more attractive.

Gold Trades Quietly – Opportune Entry Point

Current levels of gold and silver offer long-term investors an advantageous entry point. Action in the gold market has been quiet, which allows for orderly accumulation of new positions in precious metals.

The gold market traded sideways in March – as the precious metal traded between roughly $1,750 – $1,675 an ounce. Pullbacks to the lower end of that range were greeted with fresh gold buying.

Gold and silver remain in a corrective phase – after gold chalked up a 22% gain in 2020 and silver climbed 44% last year. However, both platinum and palladium are showing strong year-to-date performance with gains of 12% and 8%, respectively.

Inflation is Coming

Strength in the U.S. dollar and rising U.S. Treasury yields weighed on gold in March. Yet, it is only a matter of time before inflation winds its way to the forefront and creates a catalyst for a new up leg in the gold and silver markets.

“With the amount of accommodative fiscal and monetary stimulus sloshing around the economy, we expect inflation rates to be above trend this year,” said LPL Financial Chief Market Strategist Ryan Detrick on March 30.

Rising inflation is positive for precious metals as investors turn to hard assets during inflationary periods to protect their purchasing power and wealth. Gold historically climbs sharply during inflationary periods. Do you own enough?

Our Recommendations

The high-end rare coin market remains an attractive buying opportunity for long-term investors. Rare coins offer investors an opportunity for significant price appreciation in the current environment.

The appeal of rare coins to investors is their impressive historical price appreciation, which has outpaced the level of the underlying precious metal.

Buying Rare Coins

For investors able to hold 5–10 years, ultra-rare acquisitions offer the safest store of wealth and the strongest growth potential. Accumulate the highest-quality coins that you can afford. This strategy will pay off handsomely as rarity tends to appreciate the fastest.

Buying Precious Metals

An accumulation strategy is probably the best option for clients wishing to add to holdings.

Trading Precious Metals

Silver continues to offer a better value than gold. Generally, readings above 65 signal that silver is undervalued and is a strong buy signal for the metal.

Current Ratio: 69 oz. silver = 1 oz. gold

The gold/silver ratio is a way for investors to measure the relative value of these two metals. The ratio indicates the number of ounces needed to buy one ounce of gold. Investors have long turned to this ratio to identify attractive long-term entry points for precious metals purchases. A high ratio is generally viewed as a signal that silver is undervalued relative to gold. That is what we’re seeing now.

You may want to consider converting some gold holdings into silver.

Popular silver products: 10 oz. & 100 oz. silver bars, Silver American Eagles in monster boxes.