After a tumultuous week commodities were relatively quiet Monday morning. Gold and silver were basically flat, platinum, palladium, copper and crude oil were all higher.
Gold was down $1.22 to $1,593.04 and silver was off $0.22 to $28.51, leaving the silver/gold ratio at 55.9.
Enjoy the calm while it lasts as events could easily conspire to bring a fresh round of volatility into trading as news comes that hedge funds and other big players are betting big against the euro in anticipation of Greece switching back to the drachma.
Also impacting precious metals are projections that show lower than expected inflation which could spur the Federal Reserve to consider additional stimulus.
The news would be bullish for equities markets which have taken a pounding so far in May and would acknowledge that record low long-term interest rates have not helped people refinance home mortgages or done much to spur home buying. It just doesn’t seem to sink in at the Federal Reserve that people might not want to buy homes because home ownership is no longer a centerpiece of the American dream and 7.4 percent of mortgages nationwide are already delinquent. That means almost 10 percent of the housing market is off the table as far as the recovery is concerned.
So between the situation in Europe, which has not gone away, and the potential for the Fed to fire up the printing presses on this side of the Atlantic there is plenty of fuel for the fires of volatility; all we’re waiting for is a spark to set it off.
In the meantime gold prices are still below $1,600, near the low point of 2011 prices. With the silver/gold ratio at quarterly highs and some vendors selling 10 oz silver bars at $0.99 over spot, it might be good to consider putting some of your regular purchases into silver.
Adding a little silver to your precious metals purchases gives you an upside hedge as well since silver is a metal with industrial uses. The shiny metal has been in the shadows lately due to the decline in film production, but there is a quiet explosion of new uses for silver quietly taking place in industrial processes such as solar panels, new reflective coatings on energy efficient windows and medical applications that capitalize on silver’s unique antibacterial properties.
Either way you go the future for precious metals looks brighter than either equities or the housing market right now.