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Gold and Silver Zig-Zag alongside Economic Uncertainty
Is This Fall Season a Good Time to Back Up the Truck?
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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.
In this holiday-shortened week, precious metals investors got hit with some price volatility. Silver had been up nearly 5% as U.S. markets opened Tuesday. But by Thursday, those gains disappeared – only to turn around and rally back this morning with the release of some lousy employment numbers for August.
As for gold, it was showing a loss for the week of about 2% heading into Friday but recovered roughly 1% of that loss this morning. It does appear however that for the second week in a row, bulls have tried – but failed – to hold prices above the $1,400 level.
Traders appeared to be unloading some of the "fear trade" positions they had put on. Uncertainty faded over whether the U.S. would go to war with Syria and how open-ended the extent of military action there would be. The Obama Administration's push for military strikes on Syria got the stamp of approval by the U.S. Senate Foreign Relations Committee this week.
Secretary of State John Kerry tried to assure Senators that no ground troops would be deployed. The Secretary waffled under questioning about whether the Administration would completely rule out ground forces and agree to be bound by what Congress authorizes. But the plan presented for public consumption of limited air strikes calmed some nerves among investors.
Investors instead turned their attention to economic data. On Wednesday, the Federal Open Market Committee released its so-called Beige Book. It presented a mixed picture for the economy, fueling speculation on both sides as to whether tapering of Quantitative Easing looks more or less likely.
On the one hand, we're seeing moderate economic growth and rising automotive sales. On the other hand, the Beige Book noted that rising mortgage rates are starting to constrict lending activity.
And then there was this morning's mediocre employment report. The U.S. economy added only 169,000 jobs in August, which is below the 200,000 in new jobs each month needed merely to keep up with population growth. In addition, the jobs numbers for June and July were revised downward.
The market for long-term interest rates is already doing some significant tightening of its own. That may be enough to dissuade the Fed from withdrawing its $85 billion a month in liquidity boosts, which it hinted at doing earlier in the year. Analysts still expect the Fed to announce some form of tapering this month. But if it's relatively small in scope – which is the most we expect – investors may breathe a sigh of relief and bid up asset markets, including precious metals.
Retail investors have certainly been buying up silver coins this year. Last month, "silver American Eagles registered their second-best August sales totals ever – 26% higher as compared to August 2012. And this week, sales of silver Eagles for 2013 surpassed the total sold in 2012 for the entire year – quite a statement considering we're entering a very seasonal strong period for the metals where demand is usually quite brisk.
As I indicated earlier, silver prices were down modestly for the week before today. On the heels of a nice rally this morning silver now trades at $23.81 an ounce as we're recording this podcast, and now appears headed for a slight week over week again.
Although it's shown signs of consolidating over the last week or so, silver staged a furious upward march in August. Meanwhile, the other white metals – platinum and palladium – are experiencing a bit of a pullback. Platinum is off close to 2% on the week, with prices now coming in at $1,503 an ounce. Palladium has plunged 4% to trade at $698 per ounce as of this morning, but like platinum and the other metals is getting a nice bounce off of the Thursday lows.
Now may be an opportune time to accumulate some palladium, especially if you don't yet own any. After outperforming the other precious metals most of the year, palladium has corrected the hardest over the past couple weeks. Palladium doesn't always move in line with gold and silver. It's something of a wild card, which makes it a good portfolio diversifier.
Money Metals Exchange sells one-ounce Canadian Maple Leafs composed of 99.95% pure palladium. We also have lustrous platinum, gold, and silver Maple Leaf coins. At present we are able to offer silver Maple Leafs for lower premiums than were available earlier this year following the pre-April spike low in spot prices and resulting supply tightness. For those who prefer to own widely recognized government-minted coins, Maple Leafs represent a great, lower-premium alternative to American Eagles.
Although the summer months are usually a weak time for precious metals prices, the rally in August puts the market in a strong position heading into the fall.
The last four months of the year are typically among the strongest months for the metals. The lunar New Year in Asia, the wedding season in India, and the Christmas holiday season typically generate big demand for jewelry and gifts worldwide, thus spurring demand for physical gold bullion and the other metals.
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.
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.