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Disappointing Economic Numbers: Higher Gold Prices This Summer?
Investors Are Swapping Stocks for Precious Metals as Premiums on Bullion Products Fall
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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.
Welcome to this week's market wrap podcast, I'm Mike Gleason.
Well, as the month of May closes out, precious metals will head into the summer months with some encouraging signs that the spring swoon may be over at last. The metals, primarily gold, rallied this week. The boost came from some disappointing economic data that raised the odds of more monetary stimulus by the Federal Reserve.
Reports earlier this week showed an uptick in unemployment claims and a lower-than-expected rise in pending home sales in April. Also disappointing was Thursday's GDP report. Gross domestic product expanded at a 2.4 percent annualized rate in the first quarter, slightly lower than the 2.5 percent growth analysts had been expecting.
As a consequence of the weak economic numbers, the U.S. dollar lost ground, and that helped fuel a rally in precious metals. On Thursday, gold closed back above the $1,400 level, breaking above last week's trading range and increasing the odds that the potential double bottom pattern I talked about last week could be in the process of playing out. As of this recording on Friday morning, the gold spot price has crept back under $1,400 however and currently trades at $1,397 per ounce and at this point looks to hold onto a gain for the week, which is currently around 1%.
The high-risk gold mining equities, as represented by the HUI gold stocks index, gained more than 9% for the week through Thursday. This could be a precursor of positive sentiment returning to the precious metals markets after being in the dumps for the past several weeks.
Speculative traders still held record short positions in the gold futures market as of last week's Commitment of Traders report. If gold breaks above key overhead resistance levels and forces the bears to bail out of their positions, we could see what's known as a short squeeze – a sharp spike in prices driven by forced short covering.
One thing we're NOT yet seeing any signs of is silver beginning to outperform gold. As the more volatile of the two metals, silver normally posts bigger gains during precious metals advances. For the week, silver is essentially flat and currently trades at $22.30 an ounce.
As for the platinum group metals, palladium continues to fare well. It broke above $750 an ounce this week, before falling back a bit this morning, but has still posted a gain of about 3% for the week. Platinum held above support at $1,450, then staged a $25 rally on Thursday to put it up nearly 2% on the week, but has since given back most of those gains this morning. It currently trades at $1,465 an ounce and its premium to gold has fallen to about $67.
With the general stock market having a good year while precious metals are in the dumps, we're seeing some of our more savvy customers locking their stock market gains and redeploying those funds into physical gold and silver. A great place to do this is within an IRA account. Did you know you can transfer funds from your traditional IRA into a precious metals IRA account – a self-directed retirement account that allows you to hold physical metals in secure storage? Check out our website or give us a call for more info on this option.
Looking ahead, June, July, and August tend to be quiet months for the precious metals markets. But normal seasonal patterns have been thrown completely out of whack by the extraordinary volatility that roiled the markets. On an intermediate-term basis, precious metals remain extremely oversold and overdue for a strong multi-week bounce back.
If normal light-volume summer trading conditions do take hold, the good news is that premiums on popular coin products are likely to come down. We've already seen that happen to some extent for pre-1965 90% silver and American Eagles.
The April selling spree in the paper market induced a buying spree in the physical market, which in turn caused premiums to spike. They've since come down somewhat, though they remain elevated on Eagles and 90% silver coins as compared to this time last year.
For those looking for the lowest-premium government-minted and guaranteed coins currently available, Money Metals Exchange is pleased to offer Canadian Maple Leafs and Austrian Philharmonics. But if you really want to get the MOST silver for your money, the thing to do is pick up some silver rounds or silver bars.
To check pricing on any of our bullion products – or to place an order 24 hours a day, 7 days a week through our secure shopping cart – just visit www.MoneyMetals.com. Of course you can always call and speak to one of our knowledgeable and no-pressure specialists if you have any questions, need advice or just prefer to place your order by phone. Simply dial 1-800-800-1865 between 7am and 5:30pm Mountain Time, Monday through Friday.
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 depreciating dollar... with speed, with privacy and with top notch service. Have a great weekend everybody.
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.