The dollar flexed its muscles in currency markets sending commodities prices lower. Gold was joined by crude oil and silver, but industrial metals like palladium, platinum and copper were all higher.
Gold was trading at $1,660.51, down $1.09 in early trading, while silver was off $0.20 to $31.95. The silver/gold ratio stands at 51.9.
The resilience of industrial metals was in line with Q4 GDP numbers released today showing the economy grew at a 3 percent pace in the last quarter of 2011 and unemployment claims fell last week.
Gold prices may be in a short-term funk for several reasons. A few central banks in developing nations have switched from accumulation to selling gold, though not on a large scale. In India the All India Gem & Jewelry Trade Federation, one of India’s largest gold dealer associations, is insisting they will not end their strike until the government rolls back a 2 percent tax and duty hikes.
Some of the other gold and silver analysts are citing nebulous “outside market” forces for the current softness in gold prices, but I’m not seeing anything wildly out of place. Given the current circumstances the price movement seems largely in line with fundamentals. Lower demand from India, a strengthening U.S. economy, and a handful of central banks making small sales; not exactly an impenetrable shroud of mystery.
Even though we could see more downside pressure if U.S. employment numbers continue to improve, I don’t see any reason not to continue your small, regular purchases of physical gold. There are still enough landmines in the path of economic recovery on both sides of the Atlantic to think the good news is going to last very long.
The biggest indicator for making a change to your investment strategy is when you find some other investment that’s a better deal. Right now I’m not seeing one that’s a good deal for retail investors.
Take advantage of these quiet times to go bargain hunting for precious metals. With the silver/gold ratio pushing 52, this might be a good time to consider splitting your regular gold buy with some bullion-priced silver products.
Today, at 11:20 AM PT: Get the Market Movements in Advance; Williams Edge Webinar for September 15th, 2014 | John Ransom