Inflows into U.S. Dollar Hit Paper Gold and Silver

A Tale of Two Markets: Paper vs. Physical

Mike Gleason Mike Gleason
New Radio Release
October 3rd, 2014 Comments

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Welcome to this week’s Market Wrap Podcast, I’m Mike Gleason.

Lower paper prices for precious metals continue to stimulate high levels of demand for the physical.

After declining precipitously in September, gold and silver prices are continuing the downtrend here in the early part of October. For the week, gold shows another loss of 2.0% but has not broken down below its 2013 lows in the $1,180 range, not yet anyway – stay tuned. As of this morning gold has taken out the psychologically important level of $1,200 to currently trade at $1,195 per ounce as of this recording which if roughly the average cost of bringing it out of the ground.

Silver has declined more significantly than gold this week, with most of that decline coming on Tuesday, and then again this morning. Silver is now making new lows as of this morning, the waterfall like decline continues and the white metal looks lower by another 4.5% for the week. The silver quote currently comes in at the amazingly low price of $16.90 an ounce. Hard to believe.

The gold:silver ratio has risen to over 70, meaning it takes more than 70 ounces of silver to buy one ounce of gold. This reflects highly negative sentiment across the global paper trading markets toward the white metal. We have noted in the past that when this ratio rises to these historically extreme levels, silver is a better value than gold and should generally be favored when making new purchases. But the gold:silver ratio could rise higher still before it reverses -- and owners of silver should always expect higher volatility.

Turning to platinum and palladium, both metals are mostly following silver’s path. Platinum prices broke down to multi-year lows and now trade at $1,243 an ounce. The scarce metal is down 4.9% for the week, while its sister metal palladium is down a more modest 2.5% to sell at $763 an ounce. Palladium’s longer-term technical picture still looks constructive. Despite the recent setback, prices remain in positive territory for the year, showing a gain of close to 8%, a far cry from the bearish results for its precious metals brethren.

What the precious metals may need in order to get turned around here is for the U.S. dollar to start falling back. The dollar got a bid heading into Thursday’s European Central Bank announcement of new asset purchases.

Even though, the U.S. Dollar Index turned down into modestly negative territory last night, it popped back up again this morning after a better-than-expected September employment report which does not factor in the unprecedented numbers of Americans leaving the workforce altogether.

Precious metals have little chance to rally from these deeply oversold levels until the dollar starts falling back again.

Let’s face it, September was an unusually bad month for precious metals prices. But the price declines gave bargain hunters great opportunities to buy.

To be sure, physical buying picked up significantly during the month of September. Gold Eagle bullion coin sales at the U.S. Mint more than doubled from the previous month. And as Bloomberg reported on Thursday, gold orders from Australia’s Perth Mint shot up by 89% in September to the highest levels seen since October of last year.

The Perth Mint is renowned for producing uniquely beautiful gold, silver, and platinum coins at premiums that are typically lower than with other major government mints. Money Metals Exchange is proud to offer several of the Perth Mint’s finest bullion products.

We carry the Australian Gold Kangaroo, minted from .9999 pure gold. Gold Kangaroos come in tenth ounce, quarter ounce, half ounce, and full ounce sizes.

We also offer the 1-ounce platinum Australian Platypus coin. The Platypus is one of the few actively minted platinum coins available anywhere.

When it comes to silver products, there are plenty of options available from both private and government mints. But the Perth Mint’s kilo-sized silver coin is one of a kind. At just over 32 ounces, you have to hold it in your hand for yourself to fully appreciate its heft and beauty.

With silver spot prices experiencing a fire sale, now is a great time to obtain 2014 Australian silver kilo coins before this particular edition is no longer available. Also, the available supply of the limited mintage 1-ounce silver Australian Crocodile is dwindling fast.

And finally, before we close we have another exciting product special to mention. We just re-stocked up on the very popular US gold coins pre 1933 – available at prices close to their melt value.

We currently have the $10 Liberty gold coins, containing just less than a half an ounce of gold, as well as the $20 Liberty and $20 St. Gaudens coins both with just less than a full ounce of gold. And, as we’ve mentioned, before you will never hear us offering these coins unless we can make them available to you at bullion prices. Right now, you can grab these “jewelry grade” coins for roughly 7 to 8% over the gold melt value. That’s less than a lot of modern day fractionals – such as ½ ounce Gold American Eagle bullion coins for instance.

Our inventory of these historic items sold at negligible premiums have run low lately given the recent buying frenzy in the retail bullion market, so supplies are likely to go quickly. Give our specialists a call at 1-800-800-1865 to inquire about pricing and availability before we run out.

And remember you can find all kinds of great content on the metals markets, access up to the minute pricing, sign up for our Monthly Gold & Silver Savings Program, or place online orders 24 hours a day, 7 days a week by visiting

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 accuracy and with top notch service. Have a great weekend everybody.

Mike Gleason

About the Author:

Mike Gleason is a Director with Money Metals Exchange, a precious metals dealer recently named "Best in the USA" by an independent global ratings group. Gleason is a hard money advocate and a strong proponent of personal liberty, limited government and the Austrian School of Economics. A graduate of the University of Florida, Gleason has extensive experience in management, sales and logistics as well as precious metals investing. He also puts his longtime broadcasting background to good use, hosting a weekly precious metals podcast since 2011, a program listened to by tens of thousands each week.