Silver (SLV) prices started on a strong uptrend at the start of the year and topped out in Feb. – March. But after bottoming out in June, silver closed at new yearly highs, up by almost 25% in the quarter. Investors started accumulating the metals to hedge against the potential breakdown in the U.S. dollar.
Chances are low that the U.S. dollar will weaken. The trade war only strengthened, while the Yuan touched lows not seen since the last financial crisis. Market participants are hedging against the currency, treasury bonds, and the stock market. In August, the S&P 500 (SPY) and Nasdaq (QQQ) fell by over 1%.
The ongoing trade war will lead to U.S. consumers ultimately paying for the higher tariffs. Until suppliers shift output outside of China, inflation will dampen demand. As price levels rise, holding gold and silver will continue to give investors a good return. A trade war resolution is the only development that will put an end to the solid run in gold and silver prices.
Investors may continue holding Silver ETF and Barrick Gold (NYSE:GOLD). Kinross (NYSE:KGC) returned over 50% for investors and has the most upside should gold prices trend higher.
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