In this morning's guesstimate I said that the early strength in these markets after the North Korean nuclear test news meant that gold would rally to 590 and silver would rally to 1170.
But both these markets have started to sell off. Gold is now trading unchanged on the day, off $8 from today's early high. Silver is still up about 4 cents but is down 20 cents from its early high. If these markets close in negative territory for the day I shall conclude that that dog isn't barking in the precious metals market either. This would confirm my longer term bearish view and make me think that both markets will head lower for the rest of the week.
1 comment:
Well if you are going to add social/political forces into your commentary you've opened up a whole Pandora's box.
It seems that while human events are a marker of volatility in metals, the average price of gold and silver serve better as a general gauge of inflation. The purchasing power of gold against staple goods is actually fairly stable over time.
Just as the supply of money has doubled in seven years, and just as fuel, food, health care and everything else costs twice as much as seven years ago, silver and gold prices are roughly twice as high.
A lot of inflation damage was done to "honest money" in the past seven years, though almost unnoticed in light of the magnitude of the change. The price of gold and silver are going down because inflation is receding due to the general slowdown in the economy, lead by the housing market.
The next wave of inflation will begin when money begins to flow freely in response to the faltering economy and the debt markets related to real estate assets. We could easily see inflation as high or higher than the past seven years as dollars are created and pumped into the markets.
While gold and silver are trading lower as we peer through our rose-colored pre-election glasses, it is nearly inevitable that the price will double within the next five to seven years. What other assets can make that claim?
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