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Precious Metals Respond to Rising Global Tensions
Iraq Debacle Triggers Rallies in Gold and Silver
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Welcome to this week's Market Wrap Podcast, I'm Mike Gleason.
This week the fear trade returned to the markets, and gold and silver have been the prime beneficiaries.
Ben Willis, Senior NYSE Floor Manager for Albert Fried & Co.: The market is trading on fear. It's fear of Iraq. It's fear of Republicans' Tea Party. It's fear of where the global economy, more importantly to me is where the US economy is headed. If that's your glass you're looking through... oil and gold [are] trading higher on fear.
As major cities in Iraq came under siege by Islamist militants, oil prices surged to new highs for the year. The Obama administration indicated U.S. military airstrikes in Iraq may be forthcoming. Meanwhile, safe-haven investors rotated out of equities and into gold and silver.
For the week, gold shows a gain of better than 1.5%, with prices currently coming in at $1,274 per ounce. Silver prices are also on the move this week. The white metal is up 2.7% to trade at $19.58 as of this Friday morning recording.
Turning to the platinum group metals, a different situation in a different part of the world drove PGM prices in a totally different direction. Both platinum and palladium fell sharply on Thursday as South Africa's problem-plagued mining industry got some apparent good news. The union bosses who had ordered a series of illegal work stoppages that severely curtailed mining production finally agreed to return the striking miners back to work.
It may still be months before production returns to normal, and both platinum and palladium will still face a large annual supply deficit. But futures traders reacted to the potential for supply to eventually catch up with demand. They slammed platinum and palladium prices in heavy-volume trading yesterday. Platinum fell 2.8% on Thursday, while palladium plunged 4.3% to negate the new 13-year high the metal briefly touched earlier in the week. Both metals are continuing to drop again this morning with platinum now at $1,435 an ounce and palladium at $816.
After outperforming the other metals all year, palladium may now be due to take a breather and give silver the opportunity to finally show some leadership. If silver manages to push through a stubborn resistance zone around $20.50 and then ultimately above the high for the year at $22 an ounce, it will have clearance to run. Silver prices could move up several dollars very quickly based solely on short covering in the futures market, as the record levels of short positions taken out by sellers in recent weeks get unwound.
That's not to say such a move is necessarily imminent. It could take place next week. Or the market could continue to chop around until the fall, a period when big up moves in gold and silver tend to be more likely to occur.
In any event, long-term investors will want to make sure they are amply positioned in silver ahead of its next big bull run, whenever it may occur. Right now market conditions are very favorable for buyers, with silver spot prices still discounted by 60% from where they were in 2011 and premiums on most common bullion products down slightly from where they were a year ago.
One of our newest silver bullion products is the Australian Saltwater Crocodile coin, produced by the prestigious Perth Mint. For those who prefer to own government-issue legal tender coins, Australian Crocodiles represent an alternative to American Eagles. These silver coins from Down Under were all struck in 2014 with a limited mintage of only 1 million worldwide. They'd make a great addition to any silver bullion portfolio. Perth has already sold out of these to wholesalers butMoney Metalsis sitting on a big stash and can handle any sized order for these beauties. If you want to snatch up some Crocodiles just let us know.
And speaking of which, don't forget that you have just a few short hours left in our Silver Bonanza promotion going on this week. Any order of $1,000 or more worth of “poor man's gold”, regardless of the product or combination of products you buy, qualifies you for free shipping and insurance on your entire order.
Let's be honest, silver simply isn't going to stay down at these low levels forever. It's only a matter of time before the fundamental picture for the metal overwhelms the headwinds and market manipulation that has been holding it back for the last several years. When it does finally move you'll want to have your stash established, and this week is as good a time as any to take advantage of these enticing prices. Again, free shipping and insurance for any order containing at least $1,000 worth of silver bullion – but only if you act before this week is up.
To see live pricing and to browse our extensive product lineup, just visit our website at www.MoneyMetals.com where you can place an order 24 hours a day, 7 days a week, or give one our knowledgeable and no-pressure Specialists a call at 1-800-800-1865 and we'll be happy to assist you personally during normal business hours.
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.