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Are PM bulls worried/concerned/afraid that higher interest rates will squash demand for PMs?

cohodkcohodk Posts: 18,618 ✭✭✭✭✭
edited June 30, 2023 4:56AM in Precious Metals

Higher interest rates have proven to smack down PM prices in the past, are PM bulls concerned about another repeat?

Is there a yield at which demand for PMs drops in favor of a more stable guaranteed return?

Excuses are tools of the ignorant

Knowledge is the enemy of fear

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Comments

  • percybpercyb Posts: 3,301 ✭✭✭
    edited June 30, 2023 7:56AM

    It’s always a threat.
    Yes to part two. It’s happening now at these levels of interest rates.

    Forward looking though the trend for gold is higher me thinks. It’ll be a slow grind to new highs. Patience is the operative word.

    "Poets are the unacknowledged legislators of the world." PBShelley
  • dcarrdcarr Posts: 7,981 ✭✭✭✭✭

    In 1979-1980, interest rates were climbing significantly at the same time that the gold price was going up a lot.
    So both can increase at the same time. But, in general, rising interest rates can cut into the values of most assets (stocks, bonds, real estate, metals, art, etc).

    However, rising interest rates that result in greater government debt service payments will also put more money into the pockets of people that loaned money to the government. That can also provide an inflationary impetus.

    Will the US Treasury have to start printing even more money to make the higher debt service payments ? That is very possible.

    And higher interest rates could cause more problems for banks. Precious metal premiums have come down because, in my opinion, things have been quiet on the banking front (no new failures of any major banks for a while). But that could change any day if higher interest rates start causing stresses in bank portfolios.

  • derrybderryb Posts: 36,186 ✭✭✭✭✭

    rates are up, gold is at near all times high. what is there not to understand?

    Keep an open mind, or get financially repressed -Zoltan Pozsar

  • GoldFinger1969GoldFinger1969 Posts: 1,288 ✭✭✭✭

    REAL interest rates are strongly positive today, they were negative in 1978-80.

    Gold is holding up which isn't bad.

  • derrybderryb Posts: 36,186 ✭✭✭✭✭

    do people borrow money (at an interest rate) to buy PMs?

    Keep an open mind, or get financially repressed -Zoltan Pozsar

  • PerryHallPerryHall Posts: 45,390 ✭✭✭✭✭

    @derryb said:
    do people borrow money (at an interest rate) to buy PMs?

    I assume this is a rhetorical question. :D
    Most don't but a few with a gambling addiction will.

    Worry is the interest you pay on a debt you may not owe.

  • cohodkcohodk Posts: 18,618 ✭✭✭✭✭

    @derryb said:
    rates are up, gold is at near all times high. what is there not to understand?

    In the last 2 months the 2 year yield has increased 112 basis points, the 5 year yield up 90 basis points and the 10 year up 50 basis points. Gold has dropped $150 and silver is down $4 in the same time.

    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • cohodkcohodk Posts: 18,618 ✭✭✭✭✭

    @derryb said:
    do people borrow money (at an interest rate) to buy PMs?

    Didn't Deadhorse say he took out home equity loan to buy silver?

    This action was an increase in demand. If rates were higher at the time, would he have done the same? Probably not, therefore a reduction in demand.

    Do higher rates provide a headwind to PM prices as there are other alternatives for folk to park their cash? Is there a yield at which a PM investor would sell PMs to lock in a stable, guaranteed return?

    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • TwoSides2aCoinTwoSides2aCoin Posts: 43,832 ✭✭✭✭✭

    D) None of the above.
    Not worried, concerned or afraid.

  • derrybderryb Posts: 36,186 ✭✭✭✭✭

    @cohodk said:

    @derryb said:
    rates are up, gold is at near all times high. what is there not to understand?

    In the last 2 months the 2 year yield has increased 112 basis points, the 5 year yield up 90 basis points and the 10 year up 50 basis points. Gold has dropped $150 and silver is down $4 in the same time.

    Yet gold is near all time highs.

    Keep an open mind, or get financially repressed -Zoltan Pozsar

  • cohodkcohodk Posts: 18,618 ✭✭✭✭✭

    @derryb said:

    @cohodk said:

    @derryb said:
    rates are up, gold is at near all times high. what is there not to understand?

    In the last 2 months the 2 year yield has increased 112 basis points, the 5 year yield up 90 basis points and the 10 year up 50 basis points. Gold has dropped $150 and silver is down $4 in the same time.

    Yet gold is near all time highs.

    Everything is ne a r its all time highs

    Is there are yield at which PM stackers would be convert their holdings into a stable and guaranteed return?

    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • derrybderryb Posts: 36,186 ✭✭✭✭✭
    edited July 1, 2023 5:17PM

    @cohodk said:

    Is there are yield at which PM stackers would be convert their holdings into a stable and guaranteed return?

    You're assuming that PM stackers only stack PMs. The ones I know keep a stack of PMs for a specific reason, a reason that is normally not swayed by other yields. For those market swings they stack other markets. I don't cancel my life insurance every time the doctor gives me a clean bill of health, I remain thankful that it is expiration date has not arrived.

    Keep an open mind, or get financially repressed -Zoltan Pozsar

  • cohodkcohodk Posts: 18,618 ✭✭✭✭✭

    I don't care of PM stackers stack other stuff. This is a PM forum and I'm asking if PM stackers would be begin to stack yield instead of stacking PMs.

    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • percybpercyb Posts: 3,301 ✭✭✭
    edited July 1, 2023 7:32PM

    @cohodk said:

    @derryb said:

    @cohodk said:

    @derryb said:
    rates are up, gold is at near all times high. what is there not to understand?

    In the last 2 months the 2 year yield has increased 112 basis points, the 5 year yield up 90 basis points and the 10 year up 50 basis points. Gold has dropped $150 and silver is down $4 in the same time.

    Yet gold is near all time highs.

    Everything is ne a r its all time highs

    Is there are yield at which PM stackers would be convert their holdings into a stable and guaranteed return?

    Yes. I’ve sold 1/3 my PMs over the past several months to buy T bonds.

    "Poets are the unacknowledged legislators of the world." PBShelley
  • derrybderryb Posts: 36,186 ✭✭✭✭✭

    @cohodk said:
    I don't care of PM stackers stack other stuff. This is a PM forum and I'm asking if PM stackers would be begin to stack yield instead of stacking PMs.

    And I'm saying they likely already are.

    Keep an open mind, or get financially repressed -Zoltan Pozsar

  • cohodkcohodk Posts: 18,618 ✭✭✭✭✭

    @derryb said:

    @cohodk said:
    I don't care of PM stackers stack other stuff. This is a PM forum and I'm asking if PM stackers would be begin to stack yield instead of stacking PMs.

    And I'm saying they likely already are.

    Thank you.

    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • cohodkcohodk Posts: 18,618 ✭✭✭✭✭

    @percyb said:

    @cohodk said:

    @derryb said:

    @cohodk said:

    @derryb said:
    rates are up, gold is at near all times high. what is there not to understand?

    In the last 2 months the 2 year yield has increased 112 basis points, the 5 year yield up 90 basis points and the 10 year up 50 basis points. Gold has dropped $150 and silver is down $4 in the same time.

    Yet gold is near all time highs.

    Everything is ne a r its all time highs

    Is there are yield at which PM stackers would be convert their holdings into a stable and guaranteed return?

    Yes. I’ve sold 1/3 my PMs over the past several months to buy T bonds.

    Thank you.

    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • PppPpp Posts: 462 ✭✭✭✭
    edited July 2, 2023 9:03AM

    Cohodk posted: “I don't care of PM stackers stack other stuff. This is a PM forum and I'm asking if PM stackers would be begin to stack yield instead of stacking PMs.”

    No, I don’t. I understand from your post you don’t care but someone else might wonder why so the following are my reasons.
    I view pms as a small percentage of my liquid net worth and I don’t chase yield with any of my investments or speculation. I don’t look at individual performance but overall portfolio performance.
    It’s hard, but I try to live by the mottos “don’t get greedy” and “keep it simple” 🙂

  • blitzdudeblitzdude Posts: 5,435 ✭✭✭✭✭

    I've been selling the gutter but not the gold. I also haven't purchased much gold lately, but this is mostly due to the crazy premiums. Absolutely love these higher interest rates, what a blessing. Premiums are significantly easing up so I suspect back to normal purchase mode in the very near future. Rates would have to go double digits before I would sink cash in the bank over acquiring the metal of kings. RGDS!

    The whole worlds off its rocker, buy Gold™.

  • MartinMartin Posts: 833 ✭✭✭✭✭

    I’m considering it. If cd rates touch 6 for a year or plus I might sell some

    Martin

  • derrybderryb Posts: 36,186 ✭✭✭✭✭
    edited July 2, 2023 4:10PM

    @Martin said:
    I’m considering it. If cd rates touch 6 for a year or plus I might sell some

    Martin

    gold has done 6.5% and silver has done 14% in the past 12 months and one was not "locked in" for a year." In fact, during that time one could have sold his July 4 1922 gold or silver purchases for more than the 6.5%/14% one year gains because he was not locked in to a one year "hold." Volatility AND flexibility can be your friend.

    Keep an open mind, or get financially repressed -Zoltan Pozsar

  • MartinMartin Posts: 833 ✭✭✭✭✭

    @derryb I agree. I’m just feeling a little risk adverse. And the older I get the less chance I’d make it through a SHTF event. And as for inflation I think I’m covered with my real estate holdings. They should keep up with inflation or exceed it. 100k in gold converted to a CD gets me another 500 a month to spend in my upcoming retirement

    Martin

  • rte592rte592 Posts: 1,446 ✭✭✭✭✭

    I'd have to say.
    NOPE.
    Exhibit A

    Exhibit B

  • derrybderryb Posts: 36,186 ✭✭✭✭✭
    edited July 4, 2023 4:06AM

    It no longer takes SHTF events to move PMs. Pee hit the fan events appear to now do the job.

    100K in a SoFi account (4.3%) will get you $358 a month without tying up your money for a year.

    Keep an open mind, or get financially repressed -Zoltan Pozsar

  • MartinMartin Posts: 833 ✭✭✭✭✭

    Well I’ve had the gold for a few decades already. And I’m likely to have it for a couple more also. But I am thinking about. Moving it
    Thanks for the sofi advice

    Martin

  • percybpercyb Posts: 3,301 ✭✭✭
    edited July 2, 2023 10:17PM

    @derryb said:
    It no longer takes SHTF events to move PMs. Pee hit the fan events appear to now do the job.

    100K in a SoFi checking account (4.3%) will get you $358 a month without tying up your money for a year.

    You could buy 1,2,3 etc
    month treasury bond/bill over 5 percent and not pay state or local taxes like you do on you SoFi checking.
    This is something to consider.

    "Poets are the unacknowledged legislators of the world." PBShelley
  • derrybderryb Posts: 36,186 ✭✭✭✭✭

    @percyb said:

    @derryb said:
    It no longer takes SHTF events to move PMs. Pee hit the fan events appear to now do the job.

    100K in a SoFi checking account (4.3%) will get you $358 a month without tying up your money for a year.

    You could buy 1,2,3 etc
    month treasury bond/bill over 5 percent and not pay state or local taxes like you do on you SoFi checking.
    This is something to consider.

    If one is required to pay state/local income taxes. ;)

    Keep an open mind, or get financially repressed -Zoltan Pozsar

  • cohodkcohodk Posts: 18,618 ✭✭✭✭✭

    @derryb said:

    @Martin said:
    I’m considering it. If cd rates touch 6 for a year or plus I might sell some

    Martin

    gold has done 6.5% and silver has done 14% in the past 12 months and one was not "locked in" for a year." In fact, during that time one could have sold his July 4 1922 gold or silver purchases for more than the 6.5%/14% one year gains because he was not locked in to a one year "hold." Volatility AND flexibility can be your friend.

    Is there a point at which one considers "will have" over "could have"? Is there a point where a guaranteed return is seen as greater than potential return?

    And please refrain from citing "specific dates" lest one be stoned by some villagers. Lol

    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • cohodkcohodk Posts: 18,618 ✭✭✭✭✭

    @derryb said:
    It no longer takes SHTF events to move PMs. Pee hit the fan events appear to now do the job.

    The recent 8-15% decline in PMs proves this there have been no bodily excretion events.

    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • cohodkcohodk Posts: 18,618 ✭✭✭✭✭

    @Ppp said:
    I don’t look at individual performance but overall portfolio performance.
    It’s hard, but I try to live by the mottos “don’t get greedy” and “keep it simple” 🙂

    Agreed. However some may say PMs add a measure of uncertainty and volatility as opposed to a guaranteed return. Nothing more simple than a guaranteed return.

    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • derrybderryb Posts: 36,186 ✭✭✭✭✭

    @cohodk said:

    @derryb said:
    It no longer takes SHTF events to move PMs. Pee hit the fan events appear to now do the job.

    The recent 8-15% decline in PMs proves this there have been no bodily excretion events.

    gold has done 6.5% and silver has done 14% in the past 12 months so stop wetting your pants.

    Keep an open mind, or get financially repressed -Zoltan Pozsar

  • blitzdudeblitzdude Posts: 5,435 ✭✭✭✭✭

    @derryb said:

    @cohodk said:

    @derryb said:
    It no longer takes SHTF events to move PMs. Pee hit the fan events appear to now do the job.

    The recent 8-15% decline in PMs proves this there have been no bodily excretion events.

    gold has done 6.5% and silver has done 14% in the past 12 months so stop wetting your pants.

    Gutter metal has lost over half its value since 1980. Yep that's 43 years. Gutter has lost over half its value again since 2011. Yep another 12 years. That's lost decades. RGDS!

    The whole worlds off its rocker, buy Gold™.

  • derrybderryb Posts: 36,186 ✭✭✭✭✭
    edited July 4, 2023 6:26AM

    @blitzdude said:

    @derryb said:

    @cohodk said:

    @derryb said:
    It no longer takes SHTF events to move PMs. Pee hit the fan events appear to now do the job.

    The recent 8-15% decline in PMs proves this there have been no bodily excretion events.

    gold has done 6.5% and silver has done 14% in the past 12 months so stop wetting your pants.

    Gutter metal has lost over half its value since 1980. Yep that's 43 years. Gutter has lost over half its value again since 2011. Yep another 12 years. That's lost decades. RGDS!

    And offered a lot of profit opportunity in between. Like I been telling ya, buy low sell high. Stop buying high and selling low.

    And 100 year silver? Glitter metal.

    Keep an open mind, or get financially repressed -Zoltan Pozsar

  • cohodkcohodk Posts: 18,618 ✭✭✭✭✭
    edited July 4, 2023 6:49AM

    .

    @derryb said:

    @cohodk said:

    @derryb said:
    It no longer takes SHTF events to move PMs. Pee hit the fan events appear to now do the job.

    The recent 8-15% decline in PMs proves this there have been no bodily excretion events.

    gold has done 6.5% and silver has done 14% in the past 12 months so stop wetting your pants.

    Orange juice and cocoa are up 50% in the last 12 months so enjoy your breakfast and don't be afraid of interest rates.

    BTW---over 55% of the Sp500 stocks are up more than 6.5% over the last 12 months. Over 45% are up more than 14%.

    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • tincuptincup Posts: 4,760 ✭✭✭✭✭

    Interesting chart. But do keep in mind.... that is a logarithmic chart. Do you have a regular linear chart to post just for comparison?

    ----- kj
  • cohodkcohodk Posts: 18,618 ✭✭✭✭✭
    edited July 4, 2023 6:57AM

    @derryb said:

    @cohodk said:

    @derryb said:
    It no longer takes SHTF events to move PMs. Pee hit the fan events appear to now do the job.

    The recent 8-15% decline in PMs proves this there have been no bodily excretion events.

    gold has done 6.5% and silver has done 14% in the past 12 months so stop wetting your pants.

    I'll fix it for ya.....gold is down 8% and silver is down 15% in the past 16 months, so clean up your seat.

    This is a fun game!!

    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • TwoSides2aCoinTwoSides2aCoin Posts: 43,832 ✭✭✭✭✭
    edited July 4, 2023 8:14AM

    Well, if one doesn’t see the dip ( gold & silver being down) as an opportunity to add a bit then no clairvoyant, prophet or fake news outlet can help.

  • derrybderryb Posts: 36,186 ✭✭✭✭✭

    @tincup said:
    Interesting chart. But do keep in mind.... that is a logarithmic chart. Do you have a regular linear chart to post just for comparison?

    chart is linear

    Keep an open mind, or get financially repressed -Zoltan Pozsar

  • derrybderryb Posts: 36,186 ✭✭✭✭✭
    edited July 4, 2023 9:20AM

    @cohodk said:

    @derryb said:

    @cohodk said:

    @derryb said:
    It no longer takes SHTF events to move PMs. Pee hit the fan events appear to now do the job.

    The recent 8-15% decline in PMs proves this there have been no bodily excretion events.

    gold has done 6.5% and silver has done 14% in the past 12 months so stop wetting your pants.

    I'll fix it for ya.....gold is down 8% and silver is down 15% in the past 16 months, so clean up your seat.

    This is a fun game!!

    You and blitzboy should start a buy and hold club, just convince him to choose better data points to sell.

    Keep an open mind, or get financially repressed -Zoltan Pozsar

  • GoldFinger1969GoldFinger1969 Posts: 1,288 ✭✭✭✭
    edited July 6, 2023 9:53PM

    @derryb said:
    You're assuming that PM stackers only stack PMs. The ones I know keep a stack of PMs for a specific reason, a reason that is normally not swayed by other yields. For those market swings they stack other markets. I don't cancel my life insurance every time the doctor gives me a clean bill of health, I remain thankful that it is expiration date has not arrived.

    You may not, but others will. Gold is a zero-interest bearing asset. It is hurt by rising rates, and especially rising REAL rates.

    That said, short- term fluctuations in nominal and real rates aside, gold is going much higher by 2030 and 2035. At least a double, maybe $5,000.

  • cohodkcohodk Posts: 18,618 ✭✭✭✭✭

    @derryb said:

    @cohodk said:

    @derryb said:

    @cohodk said:

    @derryb said:
    It no longer takes SHTF events to move PMs. Pee hit the fan events appear to now do the job.

    The recent 8-15% decline in PMs proves this there have been no bodily excretion events.

    gold has done 6.5% and silver has done 14% in the past 12 months so stop wetting your pants.

    I'll fix it for ya.....gold is down 8% and silver is down 15% in the past 16 months, so clean up your seat.

    This is a fun game!!

    You and blitzboy should start a buy and hold club, just convince him to choose better data points to sell.

    Well you say others only buy and hold equities and bonds, so back at ya. ;)

    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • cohodkcohodk Posts: 18,618 ✭✭✭✭✭

    @GoldFinger1969 said:

    That said, short- term fluctuations in nominal and real rates aside, gold is going much higher by 2030 and 2035. At least a double, maybe $5,000.

    So 6% a year? And it won't be a liner return so you never know when the big payday will come. One can get 6% on solid corporate paper and be able to plan around the cash flow.

    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • derrybderryb Posts: 36,186 ✭✭✭✭✭
    edited July 4, 2023 12:49PM

    @cohodk said:

    @derryb said:

    @cohodk said:

    @derryb said:

    @cohodk said:

    @derryb said:
    It no longer takes SHTF events to move PMs. Pee hit the fan events appear to now do the job.

    The recent 8-15% decline in PMs proves this there have been no bodily excretion events.

    gold has done 6.5% and silver has done 14% in the past 12 months so stop wetting your pants.

    I'll fix it for ya.....gold is down 8% and silver is down 15% in the past 16 months, so clean up your seat.

    This is a fun game!!

    You and blitzboy should start a buy and hold club, just convince him to choose better data points to sell.

    Well you say others only buy and hold equities and bonds, so back at ya. ;)

    and what makes you so sure we don't. Do you, like blitzy, know the investments of others? LOL

    Keep an open mind, or get financially repressed -Zoltan Pozsar

  • blitzdudeblitzdude Posts: 5,435 ✭✭✭✭✭

    @derryb said:

    @cohodk said:

    @derryb said:

    @cohodk said:

    @derryb said:

    @cohodk said:

    @derryb said:
    It no longer takes SHTF events to move PMs. Pee hit the fan events appear to now do the job.

    The recent 8-15% decline in PMs proves this there have been no bodily excretion events.

    gold has done 6.5% and silver has done 14% in the past 12 months so stop wetting your pants.

    I'll fix it for ya.....gold is down 8% and silver is down 15% in the past 16 months, so clean up your seat.

    This is a fun game!!

    You and blitzboy should start a buy and hold club, just convince him to choose better data points to sell.

    Well you say others only buy and hold equities and bonds, so back at ya. ;)

    and what makes you so sure we don't. Do you, like blitzy, know the investments of others? LOL

    So are you coming up for the big $$$ show or what? Happy Independence Day if you still celebrate that sort of thing. SEMPER!

    The whole worlds off its rocker, buy Gold™.

  • derrybderryb Posts: 36,186 ✭✭✭✭✭
    edited July 4, 2023 3:20PM

    @blitzdude said:

    Happy Independence Day if you still celebrate that sort of thing. SEMPER!

    Happy Insurrection Day

    "We call July 4 “Independence Day.” But the British called it an act of rebellion. You see, insurrection is in the eye of the beholder."

    Keep an open mind, or get financially repressed -Zoltan Pozsar

  • blitzdudeblitzdude Posts: 5,435 ✭✭✭✭✭

    @derryb said:

    @blitzdude said:

    Happy Independence Day if you still celebrate that sort of thing. SEMPER!

    Happy Insurrection Day

    Lay off the sauce brother. I'm sure the sun is shining down there, go out and enjoy it for a few minutes. At least you have avoided all this wildfire smoke. You may even be able to take a deep breath. RGDS!

    The whole worlds off its rocker, buy Gold™.

  • tincuptincup Posts: 4,760 ✭✭✭✭✭

    @derryb said:

    @tincup said:
    Interesting chart. But do keep in mind.... that is a logarithmic chart. Do you have a regular linear chart to post just for comparison?

    chart is linear

    Actually we are both right.... and both wrong. It is semi-logarithmic. Note the left axis, the y axis.... the distance between 0 and 100.... is definitely not linear. The value of 10 is half the distance of the 100. Thus logarithmic.

    However,the x axis, the horizontal axis, is linear.

    It is an interesting graph.... but is also an interesting example of how the same date can be used to show different things. Those darned statistics! A linear - linear graph of the same data would not show the price rise between 0 and 10 due to scale, but will show large peaks between 10 and 100.

    ----- kj
  • HigashiyamaHigashiyama Posts: 2,149 ✭✭✭✭✭

    @tincup, @derryb

    I agree, it’s an interesting graph.

    It’s correct, by the way, to call it logarithmic when the y axis is a log scale and the x axis is time. The key attribute of such a graph is that time dependent data that plots as a line has a constant rate of change.

    Higashiyama
  • jmski52jmski52 Posts: 22,362 ✭✭✭✭✭

    I don't care of PM stackers stack other stuff. This is a PM forum and I'm asking if PM stackers would be begin to stack yield instead of stacking PMs.

    There's a reason that rates are higher, and it's not a good one. I'll stay with something real, thank-you very much.

    There's no, absolutely no good reason to "churn the account" chasing yield. The yield curve inversion is the most it's ever been. There's nothing on the horizon to indicate that rates won't keep going much higher.

    Q: Are You Printing Money? Bernanke: Not Literally

    I knew it would happen.
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