Safe-Haven Assets Begin to Fade

Cassie Bastien

8/30/2017 12:59:41 PM

Daily Gold & Silver Market Report – 08/30/2017

Where to start? Not only did the U.S. dollar rise early Wednesday, gasoline prices also rose to their highest in two years as Hurricane Harvey hit the Texas Gulf Coast once again. Moreover, Bloomberg Markets Reporter Dave Liedtka noted, “The S&P 500 Index pushed above its average price for the past 50 days, overcoming early weakness sparked by a Twitter post from President Donald Trump on North Korea” regarding the North Korean missile that passed over the Japanese island of Hokkaido. The missile was apparently fired in regards to a protest at annual military exercises between the U.S. and South Korea. This week, investors turned their focus toward data showing second-quarter growth in the U.S. “reached the fastest pace in two years on stronger household spending and a bigger gain in business investment,” Liedtka said. The next big question mark comes for the timing of the Federal Reserve's next interest rate hike.

Fuel-Cell Cars Support Demand for Platinum, Palladium

The electric revolution is definitely approaching, but when it will take place is still in question. However, we do see main Platinum and Palladium producers investing in fuel cell related technologies, according to SeekingAlpha Reporter Arkadiusz Sieron. Palladium is “used in catalysts in fuel cells vehicles, where power comes from combining hydrogen and oxygen over a Platinum catalyst.” Sieron says today’s fuel cell cars need 1 oz of Platinum in comparison to “2-4 grams ... for the average gasoline or diesel vehicle.” The question lies in whether the efficiency of an electric car is worth it. Nonetheless, in terms of supply and demand, we see the need for Precious Metals climbing along with other industrial metals.

Has the Value of Gold Turned Into Less of A Haven?

Looking at the movement of Gold prices from historical moments of volatility, typically a rally is seen for, some say, a substantial amount of time. However, when we look at recent volatility within the markets, the opposite is happening and the safe-haven assets appear to lose their shine much faster than before. The price of Gold rose “almost 1 percent on Tuesday morning as part of the risk aversion triggered by yet another brazen North Korean missile launch over Japan, together with uncertainty as to how the U.S. may respond,” BloombergView Contributor Mohammed A. El-Erian said. Fom a commodities market, haven-like assets such as Precious Metals move on volatility, but investors have turned their attention to opportunities such as crypto-currencies to diversify. With that being said, maybe it is possible investors are sitting on their current holdings waiting for the traditional role of Gold and Silver to bounce back.

At 1:58 p.m. (ET), the APMEX Precious Metals spot prices were:

• Gold, $1,310.60 Down $5.50
• Silver, $17.51 Down $0.02
• Platinum, $992.90 Down $9.60
• Palladium, $936.40 Down $13.30

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