With the dollar pushing higher, precious metals like gold and silver are feeling the heat.
This is significant because, historically, assets like gold and silver are seen as safe havens, particularly during uncertain economic times. However, what we’re seeing now is quite the opposite — they’re under pressure, and it doesn’t look like that trend is about to reverse anytime soon.
The strength of the dollar is the primary reason for this shift.
A strong dollar makes it more expensive for foreign buyers to purchase U.S.-denominated assets, putting downward pressure on commodities like gold and silver, which are priced in dollars.
As long as the dollar remains robust, we’ll likely see this headwind persist, limiting the upside potential of these metals.
So, what does that mean for your portfolio?
If you’re looking to chase yield or maximize returns through year-end, keeping capital tied up in underperforming sectors might be a mistake. Money managers who need to close the year on a high note are not going to park funds in these traditionally safe, low-yield assets — they’re going after areas with stronger momentum.
We’ve seen similar moves out of defensive sectors recently.
Consumer staples (XLP) and Utilities (XLU) are both showing signs of relative weakness, with money rotating out of these areas and into higher-growth options. Professional managers with hundreds of millions — or even billions — under their control are reallocating to Tech and Consumer Discretionary (XLY) instead of sitting on the sidelines.
If they’re shifting away from precious metals and low-yield sectors, individual investors might want to pay attention.
For those of you holding onto gold and silver expecting a big comeback, be prepared for the ride to stay bumpy. The prevailing dollar strength and the clear momentum in equities mean precious metals could remain out of favor in the short term.
So, unless inflation escalates or another significant risk emerges that triggers a move back into safe havens, it’s likely that gold and silver will continue to face resistance in the near future.
In times like these, it’s crucial to stay focused on where the money’s flowing.
The demand is clearly aligning with growth-driven sectors, and the big players aren’t hesitating to make those shifts. As always, keep an eye on the fundamentals and watch where the trends take us — but don’t overlook the impact of a strong dollar on precious metals and defensive assets.
For now, the path to performance looks set in riskier assets, not in gold or silver.
Kane Shieh
Kane Shieh Trading
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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
P.S. The Next BIG NVDA Opportunity Is HERE!
Nvidia reports its first earnings as a Dow member next Tuesday… And Graham Lindman’s going at 2:30 p.m. ET today, Nov. 14, to break down his complete trading game plan.
Let’s put this in perspective…
NVDA has already tripled in 2024, driven by insane demand for its AI chips.
Last quarter, the company posted 122% revenue growth — catching Wall Street completely off guard.
Now they’re projecting $32.5B in sales for Tuesday’s report… Sounds huge, right?
But here’s what’s fascinating…
Nvidia’s new Blackwell GPUs are hitting the market, AI demand is higher than ever, and it just joined the Dow, like I mentioned above.
Yet this sales projection is barely above last quarter’s $30.04B.
Either Nvidia’s being extremely conservative… or they know something we don’t… Either way, there’s a major opportunity here.
