Gold and Silver Market Update (7/19/14) – Golden Eagle
Many analysts have been looking at the market and wondering how precious metal prices have been managing to stay so firm in the current economy. The last week has answered a few of those questions, with the gold price, silver prices and platinum all losing ground. All three metals started falling on Monday, and despite a brief rally on Thursday they closed the period around 1% down on last week’s prices. So what happened, and is this the end of the rise in metal prices?
In some ways it’s surprising that silver, gold and platinum have kept rising as long as they have. Metals and other commodities are usually seen as a safe haven when the rest of the economy is struggling. That’s not quite the situation right now though. Although the economic recovery has looked pretty shaky up to now a series of continued good indicators look to be rebuilding confidence. US employment figures have shown over 200,000 net jobs created five months in a row, the dollar seems to be rallying from a long period of turbulence and low values and the stock market is climbing determinedly. These trends have been in place or developing for a while, but it looks like they’re now established enough that investors are ready to start moving away from low-risk strategies.
The effect of the broader commodity market also has to be considered. If oil prices look like rising many investors who might otherwise have bought precious metals will head for petroleum instead, and anything that looks like it might push energy prices up is bad news for gold and silver prices. Iraq, with some of the world’s largest oil reserves, is still caught up in the ISIS insurgency and right now there’s no solution in sight. There’s also the long-running standoff between Russia – the world’s largest energy exporter – and Ukraine, which flared up dramatically this week with the destruction of Malaysian Airlines Flight 17. The first reports of the disaster gave gold, silver and platinum an upwards boost, but it wasn’t enough to push the rally back to last week’s closing prices and they all sank back slightly on Friday. Now, with tougher sanctions against Russia being discussed, it’s likely crude oil could rise by up to $10 a barrel. That makes oil a very attractive short term investment.
So what’s going to happen with metal prices now? That’s hard to say. Although the US economy does seem to be picking up the situation in the rest of the world is patchy, with more rumblings of debt issues in southern Europe. That has the potential to create a rally in gold and silver. Don’t forget palladium, either. While it dropped back slightly on Friday in parallel with the other metals that followed a week-long rise, probably pushed by continued strong demand from the auto industry. In the end it closed over $10 up on last week. A strong economy may be bad for metals as a hedge, but they all have industrial uses too and that can push them back up again. Don’t sell just yet.
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. 
