Editor’s Picks: Gold and Silver Prices Hit New Highs, Then Drop — What’s Next?

Gold and silver are wrapping up a record-setting week once again.

Starting with gold, the yellow metal left market participants hanging last week after finishing just shy of US$5,000 per ounce. However, it made up for it in spades this week, breaking through that level and continuing on up to smash through US$5,500.

Silver was no slouch either. After hitting triple digits at the end of last week it moved even higher this week, spending time above US$121 per ounce.

Unfortunately, it didn’t take long for those questions to be answered.

Gold and silver prices dropped precipitously as the week drew to a close, with the yellow metal finishing Friday (January 30) just below US$4,900 and silver sitting at about the US$85 level.

What’s going on, and more importantly, what should investors do?

Let’s tackle what’s going on first. The broad consensus from the experts I spoke to at VRIC was that gold and silver prices continue to be driven by elements that have been in play for years, such as strong central bank gold buying and silver’s persistent deficit. But both metals have new factors contributing to their gains.

Adrian Day of Adrian Day Asset Management highlighted two points that have changed for gold, with the first being increasing global chaos. Here’s how he explained it:

Day also mentioned gold purchases from stablecoin issuer Tether as a new factor for gold:

On the silver side, the dynamics are undeniably complex, but Willem Middelkoop of the Commodity Discovery Fund summed it up like this:

So how should investors approach this environment? Personalization was a major theme among the people I spoke to at VRIC, with many emphasizing the importance of understanding why you own the assets in your portfolio and what circumstances would lead you to sell.

Here’s Lobo Tiggre of IndependentSpeculator.com on how that could look right now:

With that said, two key themes emerged when it comes to what experts are doing now.

The first is silver stocks. Multiple market watchers, including Rick Rule of Rule Investment Media, believe silver stocks are set to move higher now that the metal itself has broken out.

Rule said he sold 80 percent of his physical silver and used around half of the money to buy silver companies. This is why he did it:

The second place people are rotating to is oil and gas stocks. You may remember that I touched on this in last week’s video, and the theme strengthened at VRIC — Rick himself took 25 percent of the money he made selling physical silver and put it in oil and gas stocks.

While opinions differ on whether now is the exact right time to buy, I heard multiple times that senior dividend-paying oil and gas companies are a play to consider for those who have taken profits in the gold and silver sector and are looking for the next ‘buy low’ opportunity.

Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.