Summary

  • GLD has erased its gains posted in the early parts of 2016.
  • Declines in precious metals assets have come as a result of investors moving from gold to stock benchmarks.
  • Tide could turn if markets do not have accurate expectations of where interest rates are headed next year.

Over the last few weeks, we have seen the market effects of the Trump administration and its pro-growth honeymoon period. Most important has been the bull rallies in the stock benchmarks, as instruments like the SPDR S&P 500 ETF have had no problem making consistent new highs even with very little in the way of earnings performance to support these moves. But the real question here deals with whether or not this can continue for much longer, as rallies in the economy will now have to be matched by what is being seen in the stock market. Without this, investors that are heavily positioned in equities will become vulnerable to downside shocks in their portfolio account balances.

The extent of the disconnect here is more than the majority has likely considered – and this is something that could alter the long-term trends in the precious metals space as investors reposition for safe haven surprises into the second half of next year. This could send instruments like the SPDR Gold Trust ETF and the iShares Silver Trust ETF higher/lower when viewing assets on these time horizons.

Source: Seeking Alpha