The Greatest President Ever for Precious Metal Prices?
Love him or hate him, there’s one thing that President Donald Trump has done since he took over the White House, and that’s create a lot more uncertainty around the world. And this is great for precious metal prices.
Global Uncertainty Boosting Precious Metal Prices
Earlier this month, 59 American Tomahawk missiles rained down on a Syrian airbase. Then the “Mother of All Bombs” (MOAB) was dropped on Afghanistan by the United States. It was the largest non-nuclear bomb ever used by the U.S. military. Both of these moves can be described as coming out of nowhere.
Now we have the U.S. aircraft carrier USS Carl Vinson headed toward the Western Pacific Ocean. This is near the Korean Peninsula. China and Russia have sent ships in the same area to shadow the U.S. aircraft carrier’s moves. (Source: “Russia, Chinese Ships Tail USS Carl Vinson in East China Sea,” Sputnik, April 17, 2017.)
The events that have occurred over the past few weeks under the Trump administration are making people around the world question what could be next. That uncertainty is sending investors to gold and silver, pushing precious metal prices higher.
Silver prices are already up over 13% year-to-date.
Gold Prices After Syria Bombing
When looking at the chart below on gold prices, pay close attention to the circled area.
Chart courtesy of StockCharts.com
Since the U.S. dropped Tomahawk missiles on Syria, gold prices have made an almost-vertical move to the upside.
Silver Prices Rise on Potential of War
Moving to silver, while the Trump administration has proposed spending cuts at many government departments, it has increased its defense spending. Yes, silver is a precious metal that investors often flock to (alongside gold) in times of uncertainty. But silver is also used in the aerospace and defense sectors, so a lot more silver could be needed if the U.S. goes to war again.
Tomahawk missiles contain about 15 kilograms of silver, in wires and batteries. Doing the simple math on the 59 Tomahawk missiles shot at the Syrian airbase, those missiles would have included about 31,200 ounces of silver.
What Trump’s Doing for Precious Metal Prices
Dear reader; so far, the Trump administration has been great for precious metals. As we have seen with Trump, geopolitical uncertainty could escalate within hours, and it takes a long time and lots of effort to reduce the tension once it starts.
Things could get a lot worse geopolitically from here on. All of this would give a boost to precious metal prices. What we’ve seen so far in the precious metals market could be just the tip of the iceberg.
With all this, I’m keeping a close eye on the shares of quality senior and junior mining companies. As precious metal prices soar, investors in mining companies could reap massive rewards.