Commodities, including gold and silver, moved lower in overnight trading as the dollar continues to gain against the euro and markets wait for jobs data being released at 8:30 this morning.
Gold is down $3.45 to $1,632.32 and silver is off another $0.19 to $29.92, the first sub-$30 price point we’ve seen in a long time. The silver to gold ratio continues to expand, now standing at 54.5.
The only thing really doing well across the investment landscape is the dollar. Metals, oil, and equities are all down on the week. What it means is European investors, nervous about the state of their own economy, are seeking safe haven in the dollar instead of skipping straight to gold.
We got a lesson in what happens when your currency becomes a global safe haven from Switzerland back in Septemberoflastyear. For sure the U.S. has broader economic shoulders than the Swiss, but in the global race to the bottom in paper currency, failing to deliberately debase our own currency, like even the well-managed Swiss were forced to do, will cost us jobs. It’s really that simple. Being the cleanest shirt in the hamper is not a great development in the global economy.
The long-term future in paper currency just doesn’t look that bright. The future in equities looks a little better as the economy starts to pick up, but right at this moment we’re stuck in a zone where everything is going down. Investors are quietly moving to cash, which is knocking the props out of everything.
As I’ve mentionedbefore when investors are awash in cash, all that money has to go somewhere. With savings accounts paying next to nothing, and equity markets in a funk, investors can either opt for a defensive investment like precious metals, or sit around and watch their cash lose value to inflation.
Right now investors aren’t doing anything and that’s fine with me. The stronger dollar is putting downward pressure on metals and that means your regular small buys are bringing in a few more coins. Yesterday I noticed a couple vendors offering silver bars at $0.99 over spot, which is very tempting.
Some of you wonder if you buy gold and silver now if prices will go back up. I think so, but even if they don’t it’s because the economy is getting stronger and there are more jobs. That’s why I don’t sweat down markets in precious metals, even if they go on for a few years.
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