Gold and silver both fell over 1% yesterday. Gold fell $14.60 to $1,282.10 while silver fell 25 cents to $20.37/oz.
Asian trade was limited to a narrow band of $5.00 and volumes traded on Globex were again down. Gold in Singapore remained in a tight range between $1,280/oz and $1,285/oz. and traders appear to be waiting for the non farm payrolls data later today.
A better than expected jobs number is expected after the positive surprise that was the GDP number. Although, many participants questioned the GDP number as the growth in inventories contributed 1.66 percentage points and likely greatly exaggerated the strength of the U.S. economy in the 2nd quarter.
Markets are jittery and global stock markets are seeing losses with all U.S. indices down yesterday and Asian indices down overnight. Tensions over the Ukraine and in the Middle East and the risk of contagion in Portugal and from Argentina’s default are weighing.
Premiums for gold bars in India have dropped to new lows due to weak domestic demand. The premium on Wednesday fell to $5-$6 per troy ounce compared with $10 per troy ounce during the last week.
Silver looks better and better technically and fundamentally and was more robust than gold again yesterday.
Silver in U.S. Dollars – 50, 100, 200 Simple Moving Averages (Thomson Reuters)
Silver has tested support at the 200 day simple moving average at $20.21 and has rebounded higher again.Below that there is support at the 50 and 200 daily moving averages at $20.19/oz and $19.99/oz respectively.
U.S. Mint data regarding bullion coin sales is always an interesting indicator regarding gold and silver store of value demand.
U.S. Mint figures show that American silver eagles advanced by 260,000 on Tuesday. This increase meant that Silver Eagle sales are now over 26 million for the year. Sales of silver eagles remain at the second highest in the beautiful coin’s 29-year history.
Silver eagle sales had surpassed 29 million through the first seven months of 2013 and had an all time record year in 2013. Indeed, global silver demand rose 13% in 2013 and yet prices were lower for the year.
The table above shows the breakdown of U.S. Mint bullion products with columns listing the number of bullion coins sold last week, this week so far, last month, the month to date and the year to date.
The stealth phenomenon that is silver stackers or long term store of value buyers of silver coins and bars continues and is seen in the record levels of demand for silver eagles from the U.S. Mint.
Global Silver Demand 2004-2013 (GFMS)
Silver stackers are those who are more informed about the fundamentals of the silver market and are concerned regarding systemic and monetary risks. They realise that silver is undervalued versus gold with the gold silver ratio at 62:1. This is particularly the case on a long term historical basis.
The long term historical average gold to silver ratio is 15 to 1 and we expect it to revert to that level in the coming years and see silver over $100 per ounce as a real possibility.
See interview about silver and how it remains the precious metal with the best fundamentals here
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