Another Down Week For Gold

Posted: Oct 29, 2012 12:01 AM

Prices rallied a bit on Friday but it wasn’t enough to pull gold even for the week. 

Gold ended the week down $3.00 to $1,710.30 and silver was off $0.10 to $32.06, and the silver/gold ratio ended the week at 53.3. 

Gold is down, but it’s down from $1,780 an ounce and showed fairly good resistance in maintaining prices above $1,700.  By way of a reminder, we were trading near $1,580 back in August.  If $1,700 represents the new normal in pricing, that’s huge. 

Keep downward pressure on gold prices are the strength of the U.S. economy, which was buoyed by a stronger than expected rate of GDP growth in the third quarter.  A strengthening economy prompts investors to shift money from defensive assets, like gold and silver, to higher risk investments like equities. 

A strong economy also gives the dollar wings in overseas currency markets and that is in spite of $40 billion a month in new stimulus from the Federal Reserve.  Gold prices could very well have been in the gutter without the additional stimulus.

With Europe back to squabbling with Greece and the Euro-zone economy unable to gain any traction, it doesn’t seem like the U.S. is going to have as much competition on the world stage, which will no doubt boost our currency even further. 

At the risk of sounding ghoulish, unless there is some really bad economic news coming, we’re likely to be stuck in a similar trading pattern to what we saw this week.  I wouldn’t expect any  announcement of bad economic news until after the election, so you can expect next week to look a lot like this week and the week before. 

The good news is that while gold prices are in a difficult price range for trading, these are okay prices to trade silver.  The $32 an ounce range for silver is workable, if you shop around a bit.  With people going back to work and gold prices over $1,700 an ounce, these are tough days for your local gold and silver retail dealers. 

Now is a good time to be out making new friends in the gold and silver retail business.  You may discover that you can buy right at or even slightly below the spot price if you have the cash to spare.  Being that smiling face who always has money showing up on slow days can really pay off with some sweet deals.

Chris Poindexter, Senior Writer, National Gold Group, Inc