Gold Drifts Higher

Posted: Aug 14, 2012 12:01 AM

Gold moved higher in early trading on Monday but it did so without a tremendous amount of conviction and moved largely in line with a resurgent euro. 

In early trading gold was higher by $0.89 to $1,622.05 and silver was off $0.11 to $28.02 on low volume, leaving the silver/gold ratio at 58.7. 

Joining gold higher was platinum, while palladium and copper were trading lower.  Crude oil has been marching to a different beat than other commodities on supply concerns and has diverged from other commodities and currency valuations. 

In the absence of any major news I expect today’s pattern to set the standard for most of the week.  You can expect to see higher prices on low volume until economic news pushes the market one way or the other. 

European markets were flat today and you can expect U.S. markets to trade in a narrow range as well.  August is traditionally a slow month in finance as families gear up for back to school and end of summer vacations.

For gold and silver investors this might be a good time to be patient and wait for a better entry point.   While I believe prices are headed higher in the near-term, there just doesn’t seem to be enough conviction to sustain a long rally and not enough scary economic news to spur a parabolic bull run. 

Gold prices are now where I think they should have been all summer.  To me this isn’t so much a rally as a long overdue correction.  If you locked in your small buys earlier in the summer, you did well.  Anything in the $1,580 range and you at least covered your margin over the spot price; it’s a good feeling to be even when the package arrives! 

If you didn’t, there’s no need to panic or feel disappointed.  There will almost certainly be another entry point in the next couple months and, if you’re investing in gold on a long time horizon, like 10 or 20 years, then $40 an ounce is not that significant anyway. 

Unless speculators jump into precious metals in large numbers and cause a stampede in gold prices, I don’t see the panic buying and parabolic spikes that punctuated the last couple years returning.  While it may not feel like it to most people, the economy is doing better today. 

Enjoy the calm while it lasts. 

Chris Poindexter, Senior Writer, National Gold Group, Inc