Gold picks up pace ahead of holiday season slowdown; Bloomberg’s McGlone sees big things ahead for silver

(USAGOLD – 12/23/2020) – Gold picked up the pace in early trading as investors weighed the president’s decision to leave the new stimulus bill unsigned and financial markets wound down going into the holiday season, It is up $8.50 at $1871. Silver is up 40¢ at $25.66 after being down almost $1 yesterday. Silver’s volatility has been notable of late though its overall trend is still to the upside. Bloomberg commodity strategist Mike McGlone sees big things ahead for gold’s often erratic traveling companion. “Silver,” he says, “may be a primary metal at the forefront of favorable trends in electrification and quantitative easing, with technicals pointing to a nascent bull market, in our view. Uniquely precious and increasingly industrial, probabilities lean toward the metal — known as leveraged gold — following its yellow peer to new highs.…We see the metal following a similar trajectory as the aftermath of the financial crisis toward $50 an ounce, but with greater potential for staying power on a path paved by gold.” 

Chart of the Day

overaly line chart showing fold and silver price peaks and lag in current chart

Chart courtesy of Seeking Alpha and • • • Click to enlarge

Chart note: In a post at Seeking Alpha, analyst Peter Krauth offers a useful reminder of silver’s undervaluation when compared to gold as shown above. “In my view,” he says, “as far as investment assets go, silver still remains amongst the most undervalued. But that’s unlikely to last. Let’s look at it from a few perspectives.…Notice that in both 1980 and 2011, silver’s percentage gains were markedly higher than gold’s, easily outpacing the yellow metal. And if you peer over to the right end of the chart, we can see that silver still has clearly a lot of catching up to do. On an inflation-adjusted basis, silver also looks dirt cheap.”

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