Keeping a Balanced Portfolio

McAlvany Weekly Commentary

Here’s our weekly recap of the precious metals markets for July 10. As of this recording, here is where precious metals stand: Gold is at $2,370, up 1.7% or $40 this week, compared with $2,330 last week. Just before this recording, gold was up over 2% to $2,390. Silver rose up to $30.82 or 4.2% this week, from $29.50 the prior week. That's driven the gold to silver ratio down below 77. So we're now in the 76s on the gold to silver ratio. Platinum is flat as of this recording, but it had a mid-week pop up to $1,030. Palladium is down about 3% to $981, compared with last week’s pop up to $1,050. Looking at the equities markets… The S&P 500 rose 2% to 5,600, continuing its march upward. The US dollar index is down to 105 from 105.06, so it's only down half a percentage point this week. Interest Rates Watch The Fed has been signaling that they will be cutting interest rates in the future. But from our analysis, we see Inflation and interest rates continuing to remain higher for longer. As we’ve recommended to clients, their personal budgets need to plan for higher inflation and higher interest rates for the foreseeable future. If the Fed decides to finally cut interest rates, what will it mean for the average American? Unfortunately, we see coming rate cuts as a Main Street problem. Interest rates will drop if people lose their houses and mom and pop shops are going out of businesses. That’s when we foresee a potential banking crisis caused by the inability of the average American to pay the bills. Seeing Ratio Trends If you look back through decades of gold to silver ratio trends, you will see certain patterns. There was a five to 10 year period around the 1970s where the ratio was hovering down at the lower end of 70 to one or below. Then in the 1980s, the ratio was above the midline. Then it moved again below the midline, through the 1990s. To make trade from gold to silver, you would need silver to spike up to over 100 to one. And if you wanted to trade from silver into gold to effectively double your ounces, you would need the gold to silver ratio to drop down below 60 to one. Since these moves can happen within a matter of weeks or even days, it’s always good to plan ahead. Your McAlvany Precious Metals advisor can help you find your individual entry and exit points on products you have already purchased. You can always call us and get a free evaluation about what makes sense for your portfolio. If you haven't talked to your ICA broker in a while, it's time to do so. We can be reached at 800-525-9556.