Gold Trends Higher, Silver Stays Strong

Posted: Nov 24, 2012 12:01 AM

The euro continued to gain ground against the dollar as precious metals prices moved higher. 

Gold was up $4.57 to $1,734.17 and silver also up $0.06 to $33.40, for a silver/gold ratio slightly higher at 51.9.

I’ve been stressing all week that the trends we see in precious metals should be taken with a grain of salt.  There was no trading in U.S. markets on Thursday and only a half-day on Friday; many traders took the whole week off and volume has been relatively soft. 

Even at the lower trading volumes this week there are some trends in the pricing data remain fairly consistent.  Silver remains a good play going into next week, even after posting big gains this week.  The silver/gold ratio says silver still has room to run in an upside correction that’s been a long time coming. 

Europe is gaining ground on the U.S. as they work through yet another credit agreement with Greece and negotiations on the over-hyped “fiscal cliff” here in the states remain mired in gridlock.  Even though the fiscal cliff is a totally artificial crisis, manufactured by the same organizations predicting gloom and doom from government debt, it gets enough attention from lazy media personalities to give the perception weight in the market.  

If the lame duck Congress does reach a budget deal you can expect a correction in precious metals prices, including silver.  If the bigger deal on the federal budget gets pushed into 2013, which seems likely, expect gold to push closer toward the $1,800 mark. 

At any price point over $1,745 an ounce for gold and I would consider starting a series of small sales, but hang on to your silver unless the price moves over $40 an ounce. 

Keep in mind that the small sales advice only applies if you need the cash for big ticket durable goods or another hard asset class, like real estate. 

As I’ve said many times, I don’t normally like trading just for the sake of locking in profits unless I need the money.  You’re not keeping part of your wealth in gold and silver so you can day trade; you’re keeping it as a hedge against inflation and currency manipulation. 

All the same I recognize that everyone likes to make money and trading silver and gold can be fun.  Just stick to small sales and maintain a healthy reserve.  Besides, if you’re like me then you tend to plow my silver and gold profits back into more silver and gold.  It’s an addicting investment class and easy to get swept up in the excitement. 

Chris Poindexter, Senior Writer, National Gold Group, Inc