Safe-Haven Buying Boosts Gold, Silver Prices Sharply Higher
The comments below are an edited and abridged synopsis of an article by Kitco
Gold and silver are making strong gains. Silver is at a 6-week high and gold a 3-week high above $1,700. They are catching a safe-haven bid as the global stock and financial markets remain jittery, as media outlets focus on the war between Russia and Ukraine, and amid bullish markets that see higher crude oil prices and a weaker US dollar ahead.
History tells us that October can be rocky for the stock and financial markets. Rumors are that investment bank Credit Suisse may be in serious financial trouble.
A global tightening by central banks is hitting the credit sector, with signs of a credit crunch beginning to surface. A syndicate of banks (including Barclays and Bank of America) cancelled a $3.9 billion debt offering amid lack of demand. A group of underwriters (including Goldman Sachs, Bank of America and Credit Suisse) took losses estimated at over $1 billion on a debt package to private equity firms amid higher yields and lower demand. Outflows in US bonds hit their third largest outflow on record last week, following six weeks of withdrawals totaling $22.3 billion. Credit default swaps across major European banks soared in September, with Credit Suisse’s CEO noting the bank was facing a critical moment.
When heat in the marketplace goes up and trader/investor anxiety rises, demand for the safe-haven metals kicks in. A major investment bank is on the verge of collapse and a nation with nuclear warheads has its back against the wall while major economies are battling inflation and recession, and increasingly the public is opting for gold and silver. It will be important for precious metals to show follow-through on price strength this week, which would suggest sustained price uptrends could develop in both metals.
