Monthly Commentary/ 2019 Year End Summary
2019 was an impressive year for precious metals as gold, silver, and PGMs all saw multi-year record gains. Gold rose 18.9%, its best performance since 2010 and silver had its best year since 2016, jumping 15.4%. Platinum and palladium soared 22.4% and 57.2% respectively as supply concerns, primarily for palladium, continued to drive prices higher.
The primary factors driving markets this year were declining global growth and the ongoing trade war between the US and China. The year began during a truce enacted at the G20 Summit in December 2018. Relations seemed to be improving between the two superpowers and a trade deal was looking more likely. This sentiment quickly changed, however, the majority of 2019 consisted of ineffective trade negotiations and systematic increases in tariffs. Global growth showed signs of decline and several central banks acted to preemptively limit the effects of increasing uncertainty plaguing the world economy including the Federal Reserve, which lowered interest rates three times during the year. The uncertainty surrounding US-China relations coupled with multiple rate cuts from the FOMC helped gold rise above $1,550.00 in early September, its highest level since 2013.
Stocks performed better than most would have expected given the increasing trade tension between the world’s two largest economies and subsequent global economic decline. Fueled by positive earnings across multiple sectors and falling interest rates, equites had one of their best years of the decade. The Dow rose 22.3% in 2019, and the S&P 500 and Nasdaq performed even better, gaining 28.9% and 35.2% respectively.
Overall, 2019 brought increased volatility across major markets. Trade war developments would send markets oscillating sometimes daily. Fed minutes were scrutinized to a level not seen before as investors picked apart any changes in forward guidance and acted on them. Through the volatility though, precious metals spent most of the year climbing and ended December on a high note, which bodes well for continued success in 2020.
January 22, 2020
Gold and silver are trading sideways after consolidating around $1,556.00 and $17.80 as metals markets look for any news to swing prices in a particular direction. Falling bond yields have offset a rising US dollar and President Trump’s impeachment trial isn’t having any meaningful impact on markets. Equities, which fell yesterday on China’s corona virus fears, have rebounded slightly, but remain lower than they were earlier in the week.