Silver and gold edged higher in early trading as trading was off to a slow but optimistic start on a short holiday week.
Gold was up $6.72 in early trading to $1,724.22 and silver was up $0.29 to $32.68 for a silver/gold ratio of 52.7. Part of the strength in gold prices is related to a recovering euro which is boosting commodity prices across the board, except for platinum, the lone hold out to the downside today.
What you definitely want to do in this market is avoid panic and stick to a disciplined investment approach. Unfortunately, a few in the precious metals trade want to appeal to baser instincts. Far too often I see industry articles aimed at either fear or greed. The publications leading with fear are full of dire predictions of economic collapse and people using bundles of worthless paper currency to warm themselves over burn barrels. I believe those type of appeals are simply irresponsible.
On a percentage basis we just lived through the worst economic crisis since the Great Depression and we made it out. The government was able to, literally, flood the markets with cash and keep them limping along. Grocery stores did not suddenly start demanding gold for payment and while credit markets froze and unemployment surged, you could still buy gas with the computer blips in your bank account. Certainly there will be long-term consequences to the economy for printing that much currency but those consequences will be gradual and insidious rather than cataclysmic.
The other appeal from less than reputable media outlets is rooted in greed. Gold to $8,000 the headlines will scream, urging people to get in on the action. That appeal is just as irresponsible as those trying to stoke your fears of a Mad Max style post-crash world.
The hard part for responsible vendors is to stress that there are sound economic reasons for keeping a percentage of your wealth in precious metals without getting drowned out by the blare from the gloom and doom mongers. Also to point out that metals have performed quite well as an asset class since 2000, while also pointing out that for more than 20 years before that gold prices were relatively flat.
A wise investor ignores both the Chicken Little doomsayers and carnival barkers urging you to hurry, hurry, hurry. Take your time and make good quality investments of bullion-priced bars and rounds from quality mints when prices dip. Stick to a fixed percentage of your wealth and do allow yourself to take some profits when prices soar.
Chris Poindexter, Senior Writer, National Gold Group, Inc