Commodities were mainly flat ahead of the end of the Federal Reserve’s two day meeting that started Tuesday. Gold and silver are holding higher prices in early trading, tracking roughly with a slight gain by the euro against the dollar.
Gold is up $0.33 to $1,613.48 and silver is down $0.04 to $27.90, bringing the silver/gold ratio to 57.8.
Commodities were split in light trading yesterday morning with palladium and crude oil joining gold moving slightly higher and platinum and copper joining silver to the downside. We’re likely to stay in this narrow trading range until we get the big announcement from the Fed.
Unless the Fed surprises with a substantial new plan to pump cash into the economy, the upside has already been priced into the market. If Chairman Bernanke disappoints with an anemic offering of additional cash, then expect a price correction.
My guess is we’ll get a lot of sound and fury about the Fed being prepared to do more to stimulate the economy, but as long as inflation remains tame, the way the Fed measures inflation, then don’t expect much more beyond token measures designed to keep mortgage interest rates low. We may see some token new program, but I’m not expecting any big changes.
If gold and silver prices correct in the wake of disappointing news from the Federal Reserve, then lock in prices for your small, regular buy. Look for bullion priced bars and rounds from name brand mints like Johnson Matthey, Sunshine Minting and Pamp Suisse.
I tend to put less money into coins and collectible medallions because I don’t know that market as well and the markup can be really steep. If you prefer coins to bullion bars, then I’d suggest doing some research first and understand that market before laying down any money.
From here I see precious metals pricing recovering in August and the U.S. economy picking up in Q3. Optimism tends to buoy investment, so the time to buy is when everyone is still down in the dumps about the economy.
If we get a dip on a disappointing announcement from the Fed, take advantage of the opportunity to lock in a small buy.