Gold continues rapid descent to start the week, ‘poised to become the new core must-have asset,’ says Crescat Capital

(USAGOLD – 11/30/2020) – Gold continued its rapid descent as we begin the week. It is down another $18 at $1772. Silver is down 54¢ at $22.20. Some technical analysts see aggressive support materializing in the $1700 to $1725 range, but even that remains to be seen. That said, we suspect that a good many safe-haven physical investors with an eye to the longer term will see the current prices as something of a mystery given the economic circumstances as well as a bargain and opportunity. Typically, we would add, that is the thinking that accompanies the beginnings of a turnaround. Crescat Capital offers some insight along these lines in its November research letter.

“Among all the demand drivers for gold,” says the firm, “we view the lack of competing cheap assets being a major one. For the first time in history, junk bonds and stocks are record overvalued in tandem. Both sides of the so-called risk parity strategy, stocks and bonds, are at extreme valuations. In a world of near zero to negative yields and frothy valuations across almost every risky asset, it will become imperative for investors to seek out undervalued assets that are true beneficiaries of the current macro environment. In our view, precious metals are poised to become the new core must-have asset for capital allocators. Gold and silver are risk-off alternatives to bonds in the portfolios of prudently minded investors in today’s market.”

Chart of the Day

overlay chart showing gold silver stocks percentage returns year to date 11-26-2020
Chart courtesy of • • • Click to enlarge.

Chart note: Despite gold and silver’s recent sharp corrections, gold has still managed to post a 16.91% gain year to date. Silver has been the star performer among the precious metals so far this year – up 25.99%.  Stocks have been the laggard among this trio that we follow regularly here at the Daily Market Report – up just 3.61% thus far on the year.

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