Gold and Silver Market Update (8/4/14) – Golden Eagle
Overall it’s not been the best week in the precious metal markets, with the gold price, silver prices, platinum and even palladium all seeing sharp falls. The timing on this was slightly surprising, too – we’ve been half expecting a drop any time in the past few weeks, while equity prices were rising steadily and seemingly unstoppably. Last week stocks took a tumble, though, with the Dow Jones index losing close to 500 points – almost all that it’s gained so far this year. Normally that would push metals up as investors looked for a safe hedge, but instead they followed the Dow’s downward trajectory. Gold rose slightly on Friday in response to the latest US employment figures but still finished below the significant $1,300 mark, and silver prices and platinum simply fell. Losses were all around the 1 percent mark, not disastrous but certainly larger than most investors like to see over a single week.
The commodities markets are complex right now. Safe havens like gold, silver and platinum can be expected to fall when unemployment is heading down and stocks are doing well, and the prospect of higher oil prices is also likely to depress them by making oil more attractive to commodity buyers. On the other hand the continued risk of debt issues in southern Europe, and now the looming shambles of Argentina’s latest default, must be tempting many people to switch back to metals. It’s interesting that even after this week’s price drops analysts are split about the short-term prospects, with the numbers who think the fall will continue matched by those believing prices will stabilize or head back up next week.
It’s not all bad news for metals. Palladium, kept afloat by continuing strong demand from the auto industry, has been doing better than other metals over the past two weeks. While it also fell sharply this week there are much better odds of it reversing in the near future, especially as the latest figures show severely limited reserves of unmined metal. Scarcity is a powerful upward driver and unless new deposits are found palladium is going to be increasingly scarce in the not too long term. Rhodium is another one to watch – it managed to buck the trend this week and actually gained value, closing $35 up on last week at $1,285. We think rhodium has been significantly undervalued for a long time and it’s due to start climbing. Again scarcity is a factor, and like palladium the recovering auto industry is a major purchaser of rhodium. That should be enough to propel it past $1,350 and possibly much higher.
Overall we don’t think the market for gold, silver and platinum has reached the point where you’d be wise to offload your holdings. It’s definitely worth keeping a very close eye on prices and being ready to react if they keep on heading down, but for now there’s still a strong possibility of a rally if the rest of the economy starts to slow. This week’s troubles on the Dow are a sign that might be the case – investors had just decided the recovery was solid when stocks abruptly nosedived. Any more upsets like that and metal prices could start climbing just as quickly as they fell.
About the Author: Clint Stelfox
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. 
