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« Precious Metal Stocks Are Not An Investment They Are A Speculation | Main | Is The Future For Silver Shiny Or Not? (Part Two) »

Gold And Silver Stocks: Buy As Monetary Policy Is Relaxed


Gold and silver stocks had been out of favor for years and as a result they have had to cut costs dramatically in order to avoid bankruptcy. The largely unhedged stocks as represented by the Gold Bugs Index, the HUI, fell from an all-time high of 630 down to 100 registering a loss of 84% reduction in their market capitalization.  

In June 2019 the HUI stood at 145 and since then as managed to regain some of its value by rallying to 210 for a gain of 45% in less than 2 months.

Why the sudden interest

The main reason for this sudden change is the anticipated demise of the US Dollar as the Federal Open Market Committee (FOMC) meet on the 30th and 31st of July and it is a given that they will cut interest rates by twenty-five or possibly fifty basis points. This action by the FOMC signals to the market that all is not well, and they are trying to get ahead of the curve as the economy falters. This relaxation in monetary policy will weaken the US dollar and gold which has an inverse relationship with the US dollar will cost more in US Dollar terms as the US Dollar declines in value.

Central bankers will take a similar course of action in order to support the world economy as it begins to sputter. For instance,

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