President Trump Calls US Dollar “Too Strong,” Silver Gets A Boost

Friday, April 14, 2017

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It’s no surprise to investors that a weaker US dollar tends to be better for the price of items denominated in US dollars—precious metals in particular. But when the President speaks up on the state of the US dollar, the markets listen. Specifically, President Donald Trump recently addressed the strength of the USD, appearing to come out in favor of lower interest rates and a generally weaker currency.

It wasn’t a surprise to see an early morning boost to both gold and silver in Thursday trading. As of this morning, the markets were up slightly, with both gold and silver inching up and continuing what has been a strong week in precious metals.

Watching The Price Of Silver In April

Thus far, the price of silver  has been uncharacteristically stable through the first half of April, generally inching up in terms of the bi-weekly trend but hovering near the same mid-$18 mark at which silver began the month. Gold has, for its part, been moving up toward a $1,300 mark without the same kind of measured response. That suggests there may be some room for silver to move up, as many investors look to the ever-important gold-silver ratio to find out whether or not silver might currently be a bargain.

The recent tensions with Russia and Syria have sent precious metals on the upswing, thanks to uncertainty when it comes to foreign policy. While that normally sends investors flocking to a hedge, the value of the U.S. dollar and its relevance in these cases cannot be underestimated.

Trump At Odds With The Federal Reserve?

Because the price of silver, like gold, depends so much on the strength of the currency in which its value is denominated, silver will always look at the US dollar in order to get a good gauge of value. And if President Trump appears to be at odds with the Federal Reserve—which has hinted it may have more interest rate hikes in store for the year—it makes for interesting economic headlines.

The apparent first reaction of the market is that Trump pulling the markets in the other direction might be good for precious metals. Uncertainty, as we’ve seen this week, tends to be better for the so-called “hedge” investments. The relationship between President Trump and Federal Reserve chairperson Janet Yellen could get very interesting as the year unfolds.

Being Careful To Weigh Silver’s Gains

Are the current prices in precious metals really due to the increase in value of silver, for example, or to outside factors? There are too many relevant outside factors right now, including the U.S. dollar weakening against the yen (now approximately at a five-month low, as MarketWatch reports). And with the uncertainty in the Middle East and abroad, it’s clear that investors have reasons for investing in precious metals right now—reasons that go beyond the metals themselves.

The good news for silver investors: that may simply means it’s better to hold some wealth in precious metals than it is in certain stocks at the moment. These days, the headlines are unpredictable—and the same could prove true of prices across the markets. 

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Darren Capriotti

Darren Capriotti has been a market analyst for the past decade and is an expert in precious metals. He prides himself on his ability to analyze the market and offer true value to investors with questions about gold, silver, and other precious metals. Highly educated, incredibly passionate, and more accurate than most, Darren offers a true, unbiased look into what investors can expect in the precious metals market. You can reach Darren at dcapriotti@gold-eagle.com.