:max_bytes(150000):strip_icc()/GettyImages-2210124504-68c7632e01d148a2a3aa6a9b6c0fe062.jpg "Why Gold and Silver Keep Hitting Record Highs")
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KEY TAKEAWAYS
- Gold and silver touched new all-time highs again Tuesday.
- Precious metals have rallied strongly in the past month amid global trade tension, the federal government shutdown and increased stock market volatility.
The global rally in precious metals continued Tuesday, reflecting a litany of concerns on the part of investors.
In spot markets, gold reached an all-time high of $4,186 per troy ounce, while silver hit a new record high of $53.59 per ounce. The precious metals came off those highs later in the session, but gold and silver remain 12% and 21% higher, respectively, in just the past month.
Tuesday’s trading followed a Monday session in which nominal silver futures contracts eclipsed an all-time high established in 1980, when the Hunt brothers tried to corner the global silver market. Silver now has surged 78% year-to-date, while gold is up 58%.
What This Means for Investors
Investors often turn to precious metals as a hedge against the risks associated with economic and geopolitical uncertainty. The factors that have sparked the recent rally in gold and silver don’t appear likely to subside soon, which could indicate there’s further room for precious metals to rise. Some experts have suggested recently that investors increase the allocation of precious metals in their investment portfolios.
Uncertainty Abounds
Long viewed as an investment hedge against economic turbulence, precious metals have surged in a global environment beset by myriad uncertainties.
At the top of the list recently: global trade tension. Last Friday, President Trump rattled global markets by warning of a 100% increase in tariffs on China by Nov. 1. His warning came as a response to China’s decision to curb exports of rare earth metals used for an array of technological and industrial applications.
On social media Monday, Trump appeared to soften his tone. But Tuesday, China placed sanctions on five U.S. divisions of South Korea shipping firm Hanwha Ocean Co., and both the U.S. and China began charging port fees on each other’s ships.
In its latest world economic outlook issued Tuesday, the International Monetary Fund cited a volatile environment and new policy measures for “dim” global prospects and subdued growth.
Meanwhile, the U.S. government shutdown is about to enter its third week. Furloughs and layoffs of some government employees have begun, threatening overall consumer spending and economic growth.
The shutdown also has delayed key employment and inflation reports as the Federal Reserve ponders another interest rate cut at the end of October. Lower rates generally favor precious metals, which do not produce regular income as bonds do.
In addition, even though stocks remain near record highs, the market’s recent volatility—particularly since Trump’s pronouncement Friday—appears to have aided precious metals.
Stock investors also appear increasingly concerned about a bubble in AI stocks, which might steer some investors toward other assets. Global fund managers surveyed in the past month by Bank of America identified concerns about an AI bubble as the stock market’s biggest risk, with the majority viewing AI stocks as already in that territory.
That same BofA survey indicated that fund managers view “Long Gold” as the most crowded traded, overtaking “Long Magnificent 7.”
