The Blanchard Economic Report

Many investors are aware that the stock market has surged to new all-time highs since the presidential election.

What you may not know is that many on Wall Street are beginning to issue warnings that the stock rally is overextended on the upside. Stocks are gaining in anticipation of infrastructure spending, tax cuts and deregulation. There remain many hurdles to the implementation of these proposals and stocks will fall in disappointment if delays unfold.

Investor Alert: Many clients are using the recent strength in stock prices to take profits out of equities and diversify into metals.

Asset Performance

Despite the recent pullback in metals, gold and silver still beat stocks (data through November 30):

Gold up 10%
Silver up 19%
The S&P 500 up 7.7%.
10-Year Treasuries yield 2.36%

Looking Into the Crystal Ball For 2017

The big picture, long-term macro view remains gold-bullish.

As the stock market sits at all-time highs, valuations are overstretched. The stock market remains ripe for a corrective pullback, or even a cycle turn. Gold and silver have a negative correlation to stocks, which means as stock prices fall metals prices historically have climbed often significantly. If a bear market cycle in stocks begins in 2017, metals would benefit strongly.

Other potential bullish drivers for gold in 2017 include:

Protectionist trade policies: If trade frictions with other nations begin to unfold on the global stage, gold will benefit in 2017.
Geopolitical concerns: A number of hot spots around the globe, including Syria, are ripe for disruption, which would generate strong demand for metals as a safe-haven and amid flight-to-quality.
Inflation is already rising. Gold and silver are traditional inflation hedges and tend to rise in value during inflationary periods.

US Coin Demand

Weekly sales of U.S. Mint gold and silver coins spiked during November, climbing to their highest levels since January when the new 2016 dated coins were launched. Individual investors both in the U.S. and abroad continue to diversify portfolio holdings with physical gold. The physical demand outlook remains extremely strong.

Predicted Price Trading Bands, Next 90 Days

Gold $1,125-$1,250
Silver $16.00 – $17.80

Our Recommendations:

Buying Rare Coins:

The high-end rare coin market continues to grow
For investors able to hold at least 10 years, ultra-rare acquisitions offer the safest store of wealth and strongest growth potential

Buying Precious Metals:

The price retreat off the summer highs offers long-term investors a better entry point
An accumulation strategy is probably the best bet for clients wishing to add to holdings

Trading Precious Metals:

Silver continues to offer a better value than gold
Ratio: 71 oz. silver = 1 oz. gold
This ratio has averaged 55 to 1 over the past five years
You may want to consider converting some gold holdings to silver
Popular silver products: 10 oz & 100 oz. silver bars, Silver American Eagles in monster boxes.

The recent price retreat offers investors an excellent entry point for both gold and silver investments. Give your portfolio manager a call today at 1-866-827-4314 to discuss current market conditions and potential shifts you may want to consider to your investment picture.