Gold and Silver Market Update (1/31/2015) – Golden Eagle
Precious metals lost steam again last week, a disappointment after their much better performance earlier in the month. The only one to gain value was rhodium, with all the rest showing a loss to some extent. Even among the losers performance was inconsistent though, with some taking much more of a hit than others. Overall while it wasn’t as good as the week before it doesn’t look like anything to worry about yet.
Following two weeks of steady gains gold fell back abruptly on Tuesday, and by Thursday it had lost more than $30. Luckily Friday saw a rally that may have been triggered by a 250-point drop in the already struggling Dow, and by the close of trading the spot price was back up at $1,283.10. That still represents a loss overall but at only $11 it’s not a cause for concern just yet. A similar fall this week would tempt us to look at selling, but for now there’s every chance we’ll see gold continue its long-overdue recovery.
Based on most of January analysts were coming round to the idea that the gold-silver price ratio, which had diverged through late 2014, was moving back into a more normal range. That was good news for silver because the adjustment pulled an undervalued metal up along with gold. Last week saw that go into reverse though; while gold lost less than 1 percent of value silver dipped much more sharply, closing more than a dollar down at $17.225. That’s a concern but for the moment silver is still far above where it was just a few weeks ago, so again there’s no need to panic just yet.
Platinum was down from the previous week’s close when the markets opened on Monday but quickly rebounded to $1,260. It then dropped off again, following the same trajectory as gold – right down to the rally on Friday. The closing price was $1,238, substantially down on the week before. There were signs even then that investors were worried about platinum’s sudden rise though. Demand is healthy but not exceptional and in those conditions sudden rises spark fears of a bubble, so last week’s performance is understandable.
Palladium also ended up down, although in this case there was no Friday recovery. After spiking to above $790 on Tuesday it then dropped away to close at $769, $4 down on the period before. In general we’re relaxed about this. Palladium, which looked to be the healthiest metal for much of late 2014, dived dramatically in mid-January but seems to have rebounded to a more sensible level. We expect modest gains over the next few weeks.
The week’s bright spot was rhodium, which climbed through to Wednesday then dipped slightly on Friday but still closed $17 up at $1,137.
So overall a weak performance from the metals sector, possibly showing the effects of rebounding oil prices, but we expect the mid-term outlook to be positive. A flagging Dow and uncertainty in Europe – Greece just elected a hard-left government that has the potential to tear the Eurozone’s fragile debt crisis solution to pieces – mean there’s a need for a safe hedge, and precious metals are an affordable solution right now.
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. 
