Mike Kane, CEO of Hedgeable, explains why palladium may be overtaking gold as the most attractive precious metal for investors, what it means, and why it is not necessarily just a temporary fixture.
Gold (GLD) (IAU) has a long-standing status as the go-to asset for precious metals investors, but that status is slowly fading away. Over the past year, gold has been unable to gain any ground and does not look to be in a great position for huge gains in the near term. This should be somewhat expected given the extended bull run in equity markets and low volatility levels, but gold is stuck in a bit of a rut.
Market Realist – The above graph suggests that gold (GLD) (IAU) has declined by almost 8% in the last 12 months. Other precious metals have also suffered a similar fate. For example, silver (SLV) has declined by nearly 18% in the last 12 months. Gold usually does well when the equity markets (IVV) are troubled. Gold has an inverse relationship with the U.S. dollar (or UUP). When the U.S. dollar weakens, investors turn to gold for value storage. The S&P 500 (SPY) is up by 8.3% year-to-date (or YTD). The U.S. dollar is strengthening. The U.S. Dollar Index is up by 5.3% YTD. This is negative for gold prices. This trend could add more negative pressure on gold as the U.S. economy improves.