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General Market Commentary
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General Precious Metals
Andy Schectman | Miles Franklin – Silver Is An Investment Opportunity Of A Generation
GOLD-TO-SILVER RATIO: OPTIMISTIC BULLION OUTLOOK
Gold prices hit 3-week highs in the aftermath of the March Federal Reserve meeting. Yet as the U.S. dollar climbed a day after the Fed announcement – gold pared gains but managed to settle at a one-week high.
Andy Schectman, president of Miles Franklin, remarked on the fairly predictable price action in gold and silver leading up to a Federal Reserve meeting. He views it as an opportunity for investors to accumulate the “undervalued assets.”
Schectman says the central bank prefers “the appearance of a strong economy — but not too strong because an overly bullish forecast brings the Fed’s flip-flopping on rate hikes into question.”
Overall, the Federal Reserve’s accommodative stance and dovish position on the interest rate outlook provide positive momentum for the yellow metal. Only time will tell whether gold will challenge last year’s highs.
Rick Rule, president and CEO of Sprott U.S. Holdings Inc. spoke with Schectman about the precious metals landscape. Notably, the gold-to-silver ratio was explored in the brief but valuable discussion about the conditions in the bullion market. Schectman noted that the gold-to-silver ratio stands at approximately 84:1, an “inequity … screams to me of opportunity – akin to 4 feet of snow in the Florida Keys.”
The ratio is representative of the ounces of silver necessary to acquire an ounce of gold. While there is profit potential there are risks involved for investors. Schectman is excited about the outlook for precious metals and is particularly bullish on the ratio. He views it as an opportunity — especially considering that the average gold-silver ratio has been 50:1.
FEEDING THE BULL: NO DOTS, NO HIKES AHEAD
The latest Federal Reserve meeting concluded with the Fed Funds rate holding at steady and a forecast of no more rate hikes in 2019. The median forecast points to one more hike in 2020. The central bank announced the end to is balance sheet runoff by September 2018 and also cut its growth forecasts.
The broader market advance in the aftermath of the March Fed meeting speaks for itself. The central bank may be attempting to communicate that the U.S. economy is in good standing but its dovish shift has many scratching their heads and wondering: If “patience” isn’t enough, is staying on hold adequate for the rest of 2019?
DOVES — NO HOMING INSTINCT?
It doesn’t take an ornithologist to tell the market that the Fed’s policy statement was a dovish one. It would take a rogue birdwatcher with defective binoculars to mistake Wednesday’s commentary as hawkish. This is quite a turnaround from the stance by the central bank at the end of 2018.