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Gold/Silver Break Downtrend, Eye Higher Prices
Fed Chair Janet Yellen Attempts to Snow Congress
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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.
At last, we have liftoff! Precious metals are staging a strong rally this week, led by gold. The yellow metal busted through a downward channel that it had been mired in for the past several months. The powerful breakout that we alerted you to the likelihood of in Monday's Market Update email is now playing out!
Gold prices have surged more than 3.5% this week as of this Friday morning recording. Gold currently trades at $1,319 per ounce, a 3-month high.
As for silver, it's finally starting to break out of the lateral trading range it's been stuck in for so long. For weeks now, we've been eyeing the $20.50 level and waiting for a strong weekly close above it to confirm a breakout. Prices closed nearly at that level on Thursday and poked above it in early Asian market trading last night. As of this recording, silver has seen a big advance so far today and trades at $21.28 and is now up nearly 10% over the course of the last two weeks.
If silver prices can sustain a breakout above key resistance levels in the days and weeks ahead, we could see some serious short covering as stop losses get hit in the futures markets. Prices could spike rapidly and furiously, leaving behind prospective buyers who fail to step up to the plate to buy in the early stages of the breakout.
The other white metals – platinum and palladium – are also getting lift. In fact, the whole commodities complex appears to be blasting off now after flat-lining for months. Platinum is up almost 3% since last Friday's close and trades at $1,430, while palladium is up nearly 4% on the week and currently comes in at $742 an ounce.
So what caused the metals to move this week? Well, it probably had more to do with pent up buying pressure being unleashed as technical price levels got breached rather than with any particular news events.
Janet Yellen did give testimony before Congress this week. Both the metals and the stock markets seemed to like what they heard. The new Federal Reserve head seems to be enjoying something of a honeymoon period with investors.
Although Yellen charted a path to further reductions in monthly Fed buying in the asset markets, in her remarks she also said that supporting the economy and boosting employment were still top priorities for the Fed. She reiterated her view that it is the Fed's job to prevent deflation. That's Fedspeak for creating inflation. And just like her predecessor Ben Bernanke, Yellen dismissed suggestions that the Fed be subjected to a full public audit or that its actions be scrutinized by Congress.
Janet Yellen: A strong recovery will ultimately enable to Fed to reduce its monetary accommodation and its reliance on unconventional policy tools such as asset purchases. I believe that supporting the recovery today is the surest path to returning a more normal approach to monetary policy. What I would not support is a requirement that would diminish the independence of the Federal Reserve in implementing and deciding on implementing in monetary policy. I would be very concerned about legislation that would subject the Federal Reserve to short-term political pressures that could interfere with that independence.
I do believe that a default on US debt would be catastrophic. We absolutely want to avoid deflation. We have a 2% price stability objective. We're trying to get the economy back to full employment. I do think we've made progress but we're not there yet.
Whether the Fed's actions under Yellen will promote any sort of sustained job recovery remains to be seen. We have our doubts. But there can be no doubt that Yellen will inflate.
The question for investors is whether stocks or precious metals will provide the best inflation protection under the Yellen regime. So far in 2014, gold is signaling that hard assets are the place to be. And we hope you'll make Money Metals Exchange your place to acquire physical precious metals. No matter your budget, we can help guide you to the low-premium bullion products that best meet your goals as an investor.
On the retail side we're seeing an uptick in buying this week. Some very large buyers have stepped up at what may end up being an opportune time if current the rally continues. More money has gone into physical gold than into silver, which is usually not the case among our retail buyers.
The one-ounce products in silver continue to dominate for those buying the white metal, and great deals can still be had with low premium one-ounce rounds or even Canadian Maple Leafs, which are still nearly a dollar cheaper than Silver American Eagles.
Premiums on Silver Eagles have remained elevated because of continued mismanagement by the government-run U.S. Mint who continues to struggle to produce enough coins to meet the public demand. While demand for this higher priced form of silver is still substantial, it's fallen since January when many investors were clamoring to get their hands on the new 2014 coins.
Now for those looking to get their feet wet and simply start somewhere, our popular Monthly Gold and Silver Savings Plan is an excellent option. 3,000 monthly investors have enrolled in this simple savings plan and are enjoying the advantages of consistent dollar-cost averaging. Invest as little as $150 a month, set up automatic bank debiting, and your gold and silver is delivered to your doorstep on the schedule you choose.
To inquire about how the Monthly Savings Plan works or to get your program started, check out our website at www.MoneyMetals.com or call us at 1-800-800-1865.
And finally, before we sign off, we want to remind our customers that we will be open during regular business hours on Monday, despite it being President's Day.
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 the most value for your depreciating dollar… with speed, with accuracy and with top notch service. Have a great holiday 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.