Gold trading was surprisingly calm Monday morning considering the turbulent economic week and the results of the Greek elections which saw the pro-bailout party returned to power.
In early trading gold was up $1.28 to $1,619.90 and silver was down $0.19 to $28.43, bringing the silver/gold ratio to 56.9.
Commodities were split with crude oil, platinum, and silver trading slightly lower and gold, palladium, and copper trading slightly to the upside. Mainly commodity markets seem to be waiting on their second cup of coffee while Europe breathes a collective sigh of relief and Euro-zone finance ministers pledged more time for Greece to get a government together.
It’s clear that if the precious metals market was looking for some sign in the Greek elections, they didn’t get it. Or perhaps the situation in Spain and Italy have eclipsed Greece as the cause du jour of market worry.
Either way the $1,620 an ounce range was where we were back in January and the Greek elections were pretty much ho-hum news for the market this morning.
More likely to elicit a more energetic response in the precious metals market will be the Fed meeting on Wednesday. Some analysts are predicting a QE3 announcement and if that happens expect gold prices to surge. Yet the Federal Reserve Chairman has shown little enthusiasm for additional stimulus and if the Fed’s crystal ball shows economic activity picking up in Q3, precious metals investors are likely to be disappointed.
The last time the Fed declined to print money, precious metals prices tumbled. If the Fed holds the line it could be even worse than that for gold and silver traders; it could trigger another long-term bear correction until retail buying picks up again in China and India.
If you’re a speculative investor in precious metals, place your bets before Wednesday. If you’re a long-term gold and silver investor, then you can afford to wait a few days to determine the market direction.
Either way, with the silver/gold ratio, the number of ounces of silver it takes to buy an ounce of gold, near 57 it’s probably a good idea to split at least some of your regular investment with silver.