Gold Flat On Light Volume

Posted: Aug 18, 2012 12:01 AM

Light volume and an indecisive trading direction start the last trading day for what has been a mostly forgettable week in precious metals. 

Gold started lower by $1.44 to $1,613.86 and silver is off $0.08 to $28.11, for a silver/gold ratio of 57.4.  Apparently the word on silver is finally starting to get around. 

Commodities were split early, with crude oil joining gold and silver lower, while platinum, palladium and copper were enjoying higher prices. 

We did get a nice run up yesterday afternoon, but not enough to get us into positive territory for the week.  It’s possible we could see the same kind of run up today that we did yesterday; when volume is this low anything is possible.  There’s a chance we could still pull out a winning week but it won’t be by much. 

Now we’re stuck at a clumsy price point that’s high enough to encourage retail investors to hold off on their small, regular buy for a few days but well below any level to recommend selling.  It’s possible that if one of the big gold dealers had a discount on the usual margin over the spot price, I might still be tempted to add at this price, but it would have to be a pretty sweet deal.  Price movement like we see today only inspires me to go fishing. 

Really, this is not a bad problem to have in the overall scheme of things.  The number of small investors holding any kind of gold and silver is somewhere in the range of 1 percent.  So, if you’re sitting here debating whether to make a small buy at $1,613.00 or wait to see if prices dip below $1,600 again, you’re already ahead of 99 percent of your peers who have no hedge against the valuation of the electronic blips in their checking accounts. 

More people have gold and silver in the form of jewelry but, as I explained yesterday the margins on jewelry as a metals investment are discouraging. 

When most people think of investing in gold and silver, their first thought is usually coins.  I tend to shy away from coin investments because the margin over the spot price can be really high and there are many factors that can influence coin value besides the metal from which it is cast. 

If you want to try coin collecting as your preferred means of gold and silver investment, then I’d suggest doing some reading first.  For those new to gold and silver investing, I still recommend bullion-priced bars and rounds as the best way to get started.

Chris Poindexter, Senior Writer, National Gold Group, Inc