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Gold and Silver in a Funk, but Look at Palladium!

Palladium forges ahead on continued supply disruptions

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Announcer:

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.

The story of the precious metals markets in 2013 continues to be one of contradictions. The robust buying in the physical market has diverged from the relentless selling in the paper trading market. And the various precious metals themselves now are beginning to diverge from one another.

This week, even as gold and silver suffered a pullback, platinum held its ground and palladium powered higher. Palladium is up nearly 5% on the week to $746 an ounce on fresh concerns over supply disruptions. South African mining company Lonmin, a major producer of Platinum Group Metals, shut down production at one of its mines due to a labor dispute. The world's largest palladium producer, Norilsk Nickel, said it expects the shortage in palladium output to worsen by 25 percent this year.

Although palladium prices benefited from this news, platinum fell marginally on the week and currently trades at $1,477 per ounce. Its premium over gold did expand slightly, however, as spot prices for gold fell further. Gold closed below $1,400 on both Wednesday and Thursday. As of Friday morning, the yellow metal is hovering at about $1,370.

Meanwhile, silver on Wednesday got all the way back down to its April closing lows at $22.60. It recovered a few cents on Thursday and currently trades at $22.65 as of this recording on Friday morning. A possible double bottom in silver may be forming. The positive price action in the other white metals – platinum and palladium – should eventually help lift silver prices.

So far this month, gold and silver have been struggling against the headwinds of a stronger greenback. The U.S. Dollar Index briefly traded above 84 this week – matching its 2012 high – before falling back after the New York Federal Reserve released disappointing manufacturing data. The negative Producer Price Index data released this week also pointed to slowing economic growth.

The Fed, of course, takes that to mean that the economy needs more of its magic monetary stimulus, which translated into a weaker dollar. If the 84 level on the Dollar Index proves to be strong resistance and it starts heading lower from here that could be bullish for precious metals.

Much of the dollar's apparent strength this year is attributable to Japan's orchestrated devaluation of the Yen. That, in turn, has ignited a ferocious rally in Japanese and U.S. stocks and contributed to volatility in precious metals.

Longer term – as the Japanese continue to try to devalue and inflate their way outof an over-indebted and moribund economy – Japanese citizens may begin switching out their vulnerable Yen for precious metals. Despite Japan's problems, it remains the world's third biggest economy, behind China and the United States. A currency crisis in Japan would have huge implications for the world economy and precious metals.

Gold in Yen terms actually hit a new all-time high last month before the big two-day takedown in the futures market. For now, Japan is winning the global race to debase. But in the big picture, gold stands to gain versus all fiat currencies, including the U.S. dollar.

The action in the physical retail market for gold and silver continues to suggest strongly that the current price weakness is temporary and unsustainable. Shortages, high premiums, and/or delivery delays on many products persist, including for 90% silver coins, silver Eagles, and fractional gold Eagles.

For other bullion products, including privately minted rounds and bars,Money Metals Exchange is currently able to offer them at or near our normally low premiums with little to no delays.

Also, I want to be sure to mention that we did just pick up a large amount of 90% silver coins – so availability on that popular form of silver is good, but the premium over spot is still rather significant and value buyers may be better off going with lower premium, privately minted products. However, the scarcity premium on junk silver has been so high for so long now that elevated premiums may be here to stay – or at least until silver makes a move in price much, much higher.

Remember to visit IndependentLivingBullion.com for up-to-the-minute pricing, availability on all of our products, or to place an order through our new secure shopping cart. You can order 24 hours a day, 7 days a week.

Well that will do it for this week's market wrap podcast, thanks for listening. This has been Mike Gleason with Money Metals Exchange reminding you that we remain fully committed to getting you the most value for your depreciating dollar... with speed, with accuracy, and with top notch service. Have a great weekend everybody.

Announcer:

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 www.MoneyMetals.com or call 1-800-800-1865.

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