Silver and Gold Enter Sharp Three-Day Correction -- Learn Why

Low Liquidity During Holiday Period Enables Large Players to Move the Market

Mike Gleason Mike Gleason
New Radio Release
December 21st, 2012 Comments

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Welcome to Money Metals Exchange's weekly market wrap podcast. Helping precious metals investors during these treacherous times. Now, here's this week's market wrap with commentary and analysis from the fastest growing precious metals dealer in America, Money Metals Exchange.

Mike Gleason:

Welcome to this week's market wrap podcast, I'm Mike Gleason.

Well, instead of delivering a Santa Claus rally, the precious metals markets are giving us a holiday fire-sale.

On this week before Christmas, gold got marked down by $50. On Thursday, prices briefly drifted below $1,640 per ounce – nearly touching August's breakout point around $1,630 – before recovering back up to $1,650.

Meanwhile, silver got drastically discounted. Prices are down more than 7% for the week. Silver dipped below the $30 level on Thursday, giving buyers an opportunity to nab the best prices available in silver bullion since August. Silver is still hovering at $30 an ounce.

We'll see if that level can hold. Given the strong downside momentum seen this week, silver certainly has the potential to probe to lower levels before bottoming out. It's in the nature of this metal to exhibit volatility, and often that means it becomes extremely oversold in a correction before rebounding.

But the severe downside price action seen this week in silver – and to a lesser extent in gold, platinum, and palladium – is odd given the lack of any clear impetus for it. Other asset markets are not confirming this selloff, suggesting that it's not related to fears of the "fiscal cliff" or other political or economic news items.

It's certainly not a deflation scare we're experiencing. The U.S. Dollar Index has been trending down since mid November and is lower for the week. At the same time, crude oil rose to $90 per barrel, a multi-week high. Meanwhile the stock market is enjoying a Santa Claus rally. The S&P 500 shows gains of more than 2% for the week.

So the incongruous selloff in precious metals looks peculiar, to say the least. Some analysts chalk it up to the "risk on" trade reemerging. Investors are rotating out of safe havens and into risk assets that are tied to the economy's performance.

Third quarter GDP data released Thursday showed the economy growing at a rate of 3.1% – stronger than expected. That news coupled with the recent announcement of QE4 might have been expected to boost the price of silver, which is after all a metal used in a variety of economically sensitive industrial applications.

But counterintuitive trading in the paper futures market is driving prices in precious metals, causing them to diverge in the short run from the direction where fundamentals might suggest they should be heading.

In any event, the odd action in the big-bank-dominated price-setting market ahead of the Christmas holiday has created bargain opportunities for buyers of bullion. While it may be too late for you to buy gold or silver coins as holiday gifts for loved ones this year, it may be smart to do some early shopping for next year.

While gold and silver are still higher for 2012, these lower prices aren't likely to persist far into 2013.

Now, a product note.

We still have availability on the 1/4 ounce lightly scuffed Gold Maple Leafs. These coins have some slight contact marks and we picked up a large batch at a great discount and we want to pass that on to you. Premiums above the gold spot price are only 5 to 6%, which is a fantastic price compared to their U.S. Mint counterparts, the 1/4 ounce Gold American Eagle.

They've been selling quickly this week since we announced this special limited-time offer – so don't hesitate to pick up the phone and grab some if you are interested, before they run out. Just call us at 1-800-800-1865.

Generally speaking, fractional gold coins carry a higher premium over the spot price, which is why value investors tend to shy away from them in favor of the larger 1-ounce size. With larger items, minting costs are a smaller overall part of the cost. However, when good deals like this come along on widely recognized fractional gold coins, it makes some real sense.

For pricing and availability on these 1/4 ounce Gold Maples, and other product specials – including what may very well be the last bit of the old historic U.S. gold coins that we figure to have for a while, we got a small amount of those in yesterday and they'll be gone quickly, just give one of our knowledgeable and no-pressure specialists a call at 1-800-800-1865.


Thank you for joining us for this edition of the Money Metals Exchange Weekly Market Wrap. Be sure to come back next week, and don't forget to subscribe to our weekly podcast through iTunes. For answers to all of your questions, or to discretely and securely buy or sell gold or silver coins, bars, and rounds, call 1-800-800-1865. Our knowledgeable and no-pressure specialists are standing by between 7:00 a.m. and 5:30 p.m. mountain time, Monday through Friday. Visit us at or call 1-800-800-1865.

Mike Gleason

About the Author:

Mike Gleason is a Director with Money Metals Exchange, a precious metals dealer recently named "Best in the USA" by an independent global ratings group. Gleason is a hard money advocate and a strong proponent of personal liberty, limited government and the Austrian School of Economics. A graduate of the University of Florida, Gleason has extensive experience in management, sales and logistics as well as precious metals investing. He also puts his longtime broadcasting background to good use, hosting a weekly precious metals podcast since 2011, a program listened to by tens of thousands each week.