The yellow metal rose decisively past US$4,600 an ounce on Monday (January 12) and traded above that level for a good part of the week.
In turn, silver reached what is perhaps an even more impressive price milestone, rising above $90 an ounce and breaking $93 on Wednesday (Jan. 14).
Right now there is a very long list of factors supporting the precious metals, and we don’t have time to discuss them all today. Instead, let’s take a look at a few that made headlines this past week and break them down.
First, there is the latest news about the clash between US President Donald Trump and Federal Reserve Chairman Jerome Powell. On Sunday (Jan. 11), Powell said the Justice Department had served the Fed with grand jury subpoenas two days earlier threaten criminal charges.
I had the chance to join in the conversation Mario Inneccowho is in charge @maneco64 channel on YouTube, not long after Powell’s statement – this is how he summed it up:
“They have subpoenaed documents and they are supposed to be related to the renovation of the Fed headquarters in Washington, DC. But Jay Powell came out and said that’s not the case. It’s mainly because they want him to lower interest rates.
“And he’s probably right. I think they’re using all kinds of tricks, let’s say, to get rid of him because I think the government, even though they’re talking about how the economy is doing so well, they’re desperate.”
Trump himself has said he had no knowledge of the investigation, and has also claimed that this is the case not interested in firing Powellwhose term as Fed chair ends in May.
Nevertheless, the situation has reignited concerns about the Fed’s independence and provided support for gold and silver, which tend to do better when rates are lower. It is widely expected that the next Fed chairman, who has not yet been appointed, will fall in line with Trump.
In addition, geopolitical tensions have remained high. Venezuela is still in the spotlight after its former president was impeached by the US last week, and this week Trump warned about it would intervene in Iran if the executions of anti-government protesters did not stop.
Iran responded by saying it would attack US bases if that happened.
These and other events are driving safe haven demand for gold and silver, but I want to highlight a few more points on the silver side that I think are worth watching.
One of these is the news that the US plans to do this waiving new tariffs on crucial minerals after receiving the results of a Section 232 investigation launched last year.
Although a presidential proclamation states that the import of processed critical minerals and their derivatives poses a national security risk to the US, the country will first take steps such as negotiating supply agreements with other countries.
Silver was recently identified as a critical mineral in the US, and some market watchers believe this news from the US was responsible for a mid-week price drop for the white metal. Others, however, continue to highlight silver’s deeper underlying drivers.
I heard about it recently Andy Schectman by Miles Franklinwho highlighted that a key element supporting silver at the moment is the fact that more and more entities want physical delivery.
Here’s how he explained what he sees:
“For years I’ve been saying that the best-informed, well-financed traders – and I will emphasize that they are well-informed, namely the central banks – have been for delivery since 2020. Very unusual, because in reality no one has ever been for delivery. And this started to accelerate. But all the while, the US was not part of this game. We saw it in the South with the BRICs. And now suddenly we’re seeing the best-informed traders in North America standing up for delivery in large quantities.”
Gold ended the week just below $4,600, while silver was slightly above $90.
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Securities Disclosure: I, Charlotte McLeod, have no direct investment interest in any company mentioned in this article.
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