Gold and Silver Market Update (8/11/14) – Golden Eagle
This has been a very unsettled week in the precious metals market, with most of the key commodities reversing last week’s track. Silver was the main exception, with a continuing fall taking it down to its lowest weekly close since mid-June. In general there were a few surprises for everyone. Some of the moves make sense in light of what’s happening in other markets, while some are a bit harder to explain.
Firstly, gold rallied strongly after a disappointing performance last week to close at $1,308.90. This wasn’t completely unexpected; in fact it was slightly surprising that gold didn’t climb last week as the Dow Jones Industrial Average fell by around 500 points, wiping out everything it’s gained this year. Normally that would be a strong signal for investors to start moving from equities into a shelter like gold. Instead it seems like it took a few days for the move to filter through, but now it’s under way. Unless stocks recover next week we’d expect to see gold continue to push up, hopefully breaking through the $1,310 ceiling that seems to have been blocking it for the last few weeks.
Silver prices are more of a mystery. In general the spot price has been tracking gold fairly closely for several months, so at first glance it’s hard to say why silver is continuing to fall while gold rallies. Unless the price picks up next week it’s on course to fall below where it ended up after last August’s high, and if that happens a lack of confidence is likely to send it lower still. The number to watch is $19.60 per ounce, and one more week like the last two will see that broken. One thing to remember is that demand for silver is driven more by industry than gold, so uneasy stock prices and fears of continued disappointing growth could be having an effect.
Platinum, like the gold price, dipped when the markets opened then came back strongly, making up all the ground it’s lost this month. Again like gold it slid back slightly on Friday as the Dow Jones rallied, but still managed to close at $1,471.
Palladium was another winner. It fell sharply last week but we expected to see it turn round due to strong demand from the auto industry and low known reserved of extractable metal. As soon as the markets opened this week the spot price took off and kept climbing all week, closing at $858. There’s no reason for that to go into reverse any time soon – even if demand falls slightly the scarcity of unmined reserves should keep the price rising.
Finally rhodium also gained all week, again most likely down to strong industrial demand. Sanctions against Russia probably also contributed, as after South Africa the country is one of the largest suppliers.
Overall it’s been a much better period than last week was. That might not be much consolation if you’re sitting on a large amount of silver but for most metal investors things are heading in the right direction.
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. 
