In the investment world, it’s said that the best remedy for high prices is… high prices. And the best remedy for low prices is… low prices.
In other words, when the price of an asset is high, demand cools off until prices fall. When the price of an asset is low, its relative cheapness causes demand to surge until prices rise.
It’s a simple premise… and I think it’s high time that the former applies to precious metals. Simply put, after 10+ years of gains and 15% (gold) / 25% (silver) year-to-date gains, it’s time for a bit of a breather. There are a few key reasons why:
1) Gold jewelry demand is down across the globe, from China to India to Europe to North America. Year over year, demand fell 15% last quarter from the previous year according to the World Gold Council… and jewelry comprises 42% of all gold demand.