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Gold and Silver Market Update (10/6/14) – Golden Eagle

October 6, 2014 0 Comments

There’s still no end in sight for the seemingly endless slide of precious metal prices. All five metals dropped last week, and the falls were sharp right across the board.

Firstly, the gold price. After an initial dip, then a brief midweek rally, gold plummeted on Friday when the US markets opened. Overall it dropped nearly $29 through the week, closing at $1,190.70. That came as a bit of a surprise because the week before it had looked as if some support was building up just over $1,200. Clearly it’s evaporated because Friday saw it fall through that without even a pause.

Silver prices followed a similar pattern although as a percentage of the original price its losses ended up being considerably worse. A fall of 80 cents – nearly 5 percent – saw it finish the period at just $16.86. That’s now well below the four-year low it was flirting with the week before and there’s now no very obvious reason why it shouldn’t fall a lot further. Of course there’s also no reason why it should, but once confidence is dented it’s easy for prices to keep going down and silver’s now in that territory.

The picture for platinum is simpler; it didn’t blip upwards at all last week, although its price decline did get a lot steeper on Friday as the Dow rose. By the close of trading it had dropped a full $76 to finish at $1,223. That’s as low as it’s been since August 2009. We don’t see any risk of it reaching the sub-$800 levels it hit in 2008 but even now it’s severely undervalued. With the auto industry recovering quite strongly industrial demand is healthy.

Palladium lost $22 over the period to close at $772, but its movements don’t track with gold and silver. In fact while they temporarily recovered on Tuesday palladium fell faster, rebounding slightly on Thursday before falling away again. Like platinum industrial demand is strong and in fact palladium is barely scraping a six-month low just now, so overall it looks in much better shape than the better known metals.

Finally rhodium followed the same constant downward trajectory as platinum, shedding $110 – an astonishing 9.2% – to end the week at $1,215. We think rhodium has been underpriced since the over-correction from the crazy heights it reached in 2009 and it’s still showing a modest profit for 2014 but another week like the last one will leave many investors thinking about selling while there are still gains to be had.

So, losses all round for metals last week, and it’s not hard to find a cause. The Dow Jones had a mediocre week overall, but on Tuesday it seemed to fall over the edge. It did find a new level however, and went pretty much nowhere for two days, before rising on Friday just as abruptly as it had fallen and finishing not far below where it started. Friday’s recovery was nowhere near big enough to justify the fall we saw in commodities but it looks like it built up enough momentum to cause an overcorrection. It’s just possible that could rebalance itself this week.

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Filed in: Market Updates

About the Author:

Clint is the director of marketing at Golden Eagle Coins. Son of Richard Stelfox, co-founder of the company, Clint has been living and breathing coins his entire life. After trading for a Philadelphia Stock Exchange firm for several years Clint returned to give Golden Eagle the online presence it has today.

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