Silver and gold products are glittering this week, with gold topping $1260 and silver over $17, outperforming stocks once again and reaching their highest levels since the middle of May. In fact, everything related to these precious metals seem to be booming, from futures and exchange-traded funds to stocks in gold mining firms. High-profile investors continue to seek a safe haven for their fund by investing in precious metals, regardless of anticipation for Federal Reserve rate increases.
Since investment in precious metals is considered one of the safest ways to hedge portfolios against inflation, deflation and overall financial market volatility, it makes sense that the investors are continuing to buy gold and silver at present. Perhaps it’s the five-week low the dollar reached the last few days or investors’ dwindling confidence in Fed credibility. There is also the possibility of the United Kingdom leaving the European Union (EU), China’s falling exports and the results of the primary election that may have investors feeling conservative about their money.
The UK vote on whether the nation should exit the EU, called “Brexit,” short for "British Exit," takes place on June 23. While some posit that they effects on the markets may be minimal, others believe it will easily undermine the prices of commodities and boost the demand of safer investments, such as precious metals.
Even when the Fed minutes were released in May implying that interest rates would be raised, gold only gave up a minimal amount of its gains—and just for a matter of days. It continues to be among the best performers so far this year, outperforming bonds and the equity markets. As potential for volatility among economies across the globe continues to increase, precious metals are poised to continue their rally.
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