I know after the steady losses on Friday that it seemed like a down week, but gold actually closed higher.
Gold closed Friday down $11.19 to $1,781.16 and silver was off $0.49 to $34.49, for a silver/gold ratio creeping up to 51.6.
Gold tanked on Friday on speculation that blowout employment numbers on the U.S. jobs front are going to push the dollar higher against the euro, a development that seems quite plausible.
The complicating factor is that gold prices typically go up during times of economic recovery because people have more money and people with more money spend some of it on gold and silver. That’s why you don’t want to be moving with the herd when it comes to precious metals. The time to buy is when everyone else is selling their silver and gold to raise cash and prices are depressed. The time to sell is when buyers are pushing prices higher.
Yet being contrarian sometimes feels wrong because we all have powerful instincts to stay with the pack. When prices are going higher and the wags on cable TV are crowing about sky high markets, that’s the time to be a seller, yet a certain part of you wants very much to get in on the action. All this is building to a point about next week.
Next week is a short trading week in the U.S. due to the bank holiday, so we may not see a major move in gold prices until Tuesday. I believe that prices will move higher and silver will be the big gainer.
If gold prices do top $1,800 and you need the cash for a durable goods purchase, I would consider locking in profits with some small sales. Always keep enough in reserve in case we see prices move even higher, but as gold makes new milestones, don’t be afraid to sell if you have a use for the cash.
Again, I’m not talking about large sales. You keep gold and silver as hedges against inflation and currency valuations, not to day trade! The bulk of your metals investments should remain intact, but if you have some fun money in silver or gold, then by all means consider some small sales.
This week I’m going to cover some tips for getting the best buy and sell prices from your precious metals trades. It may take a little leg work, but when you find your “honey hole” as metals traders sometimes call them, those places that give you the best deals; it can make trading gold and silver a lot more fun.