Please ensure Javascript is enabled for purposes of website accessibility

Gold, Silver Outshine Stock Markets Despite Dow Hitting 27,000

By Dan Caplinger - Jul 22, 2020 at 5:23PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Some are concerned about the unprecedented rise in central bank intervention.

Wednesday was another positive day on Wall Street, as major benchmarks gained ground in nearly every segment of the market. Even with some new tensions between the U.S. and China, investors seemed to keep their eyes on improving hopes for global economic growth. The Dow Jones Industrial Average (^DJI 1.27%) and S&P 500 (^GSPC 1.73%) led the way higher, with the Nasdaq Composite posting more modest gains.

Today's stock market

Index

Percentage Change

Point Change

Dow

+0.62%

+165

S&P 500

+0.57%

+19

Nasdaq Composite

+0.24%

+26

Data source: Yahoo! Finance.

Yet as impressive as the recent streak in stocks has been, the commodities markets have enjoyed an even bigger rise in interest lately. In particular, precious metals markets were on fire on Wednesday, with big gains across the board that reflect sentiment about the massive amounts of monetary stimulus that global central banks are throwing into the financial markets.

Precious metals were big winners

Across the sector, precious metals had strong gains. Gold climbed by $27 per ounce to $1,868, which is within shouting distance of all-time record levels. In some local currencies around the world, gold has already eclipsed its former highs from the early 2010s.

Gold and silver bars sitting next to each other.

Image source: Getty Images.

Gains in other metals were even more exciting. Silver jumped $1.65 per ounce, nearing the $23 mark. Platinum rose $39 per ounce to $915, reflecting industrial demand. On a percentage basis, palladium brought up the rear, but even there, gains of $22 per ounce to $2,074 had investors excited about the future.

ETFs that track those prices rose nearly in lockstep. SPDR Gold (GLD 0.92%) was up 1.5% on the day, while iShares Silver (SLV 2.68%) soared 9%. Aberdeen Standard Physical Platinum (PPLT 0.55%) picked up 5% on the day, with Aberdeen Standard Physical Palladium (PALL -2.75%) settling for a gain of 1.6%.

What's happening with gold and silver?

Gold and silver have historically been hedges against uncertainty, especially in the macroeconomic and geopolitical realm. At the same time, their nature as a relatively fixed monetary base have made the two metals go-to investments for those who are concerned about the value of fiat currencies.

Central banks have aggressively fought to stimulate the global economy in the face of the COVID-19 pandemic. That's required dramatic measures, including trillions of dollars in asset purchases to try to shore up financial markets. So far, that hasn't led to any inflationary pressure. Eventually, though, some investors fear that inflation is inevitable. They hope gold and silver will do what they've sometimes done in the past and protect them against the full impact of inflation.

That said, precious metals have their negatives as investments. Long-term performance has been spotty, punctuated by substantial bear-market moves that take years to play out and erase large percentages of past gains. Moreover, with metals not producing any income, the only return investors get is from favorable market movements. That compares poorly with stocks, many of which pay dividend income that adds to total returns from capital gains.

Precious metals markets have a loyal following, and many investors there believe that this is the start of a much longer-term trend. With all the uncertainty in the markets right now, it's definitely possible that gold, silver, and the platinum-group metals could have further to run.

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

iShares Silver Trust Stock Quote
iShares Silver Trust
SLV
$19.17 (2.68%) $0.50
SPDR Gold Trust Stock Quote
SPDR Gold Trust
GLD
$167.87 (0.92%) $1.53
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$33,761.05 (1.27%) $424.38
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
^GSPC
$4,280.15 (1.73%) $72.88
Aberdeen Standard Palladium ETF Trust - Aberdeen Standard Physical Palladium Shares ETF Stock Quote
Aberdeen Standard Palladium ETF Trust - Aberdeen Standard Physical Palladium Shares ETF
PALL
$205.25 (-2.75%) $-5.81
Aberdeen Standard Platinum ETF Trust - Aberdeen Standard Physical Platinum Shares ETF Stock Quote
Aberdeen Standard Platinum ETF Trust - Aberdeen Standard Physical Platinum Shares ETF
PPLT
$89.29 (0.55%) $0.49

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
400%
 
S&P 500 Returns
128%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/14/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.