Global markets are getting slammed trhis week and commodities, including gold and silver, are taking it on the chin as well.
Gold started off down $10.28 to $1,703.02 and silver was off $0.45 to $31.71, with the silver/gold ratio creeping up to 53.7.
For industrial commodities it’s pretty much bad news across the board with copper, platinum, palladium and crude oil all posting losses. It’s almost fitting that such a dismal trading week comes to a close on a sour note. Gold is down for the week and for the month.
Gold and silver stackers can take some comfort that equity markets are getting it a lot worse; European and Asian markets were a sea of red ink today. Futures on U.S. equity markets indicated we’re not going to fare any better on this side of the pond.
In fairness October has historically been a weak month for equities, but that doesn’t explain the softness in gold prices. It also doesn’t explain the fact that the dollar continues to gain ground against the euro in spite of the Federal Reserve creating $40 billion a month in new currency essentially indefinitely.
As stated before, I believe deleveraging is a big component of why additional stimulus is not spurring growth or triggering inflation, but you can’t mock economic gravity and inflation will happen. Gold prices didn’t have a great month, but we’re still holding near the $1,700 an ounce mark. To me that’s a very positive sign for gold, despite the downward movement in prices the last few weeks.
The current softness in gold prices gives you an entry point to add a little more to your collection before we move into the holidays. With the silver/gold ratio creeping toward 54, I would be splitting part of a small Halloween buy with silver.
I’m still expecting gold and silver prices to recover through the end of the year, so take advantage of the dips. I was hesitant to recommend buying at $1,780 but I’m more inclined to starting buying gold again in small lots at $1,700 and silver at $32.
On the whole precious metals are holding up really well, particularly compared to equities. When the Federal Reserve is encouraging me to put my cash in the stock market, my tendency is to push back and buy hard assets that provide insurance against inflation. I don’t like equities in the first place and especially not at these levels.
Chris Poindexter, Se