Gold and silver prices were strong last week. Will gold and silver continue to run this week?
In a Financial Times article Main page content: Metals prices still refusing to buckle (subscription required), Kevin Morrison wrote that gold and silver had hit multi-year highs.
In a Wall Street Journal Online article A Sustained Gold Rush May Pan Out (subscription required), Alison Guerriere Ciaccio quotes different experts providing both positive and negative short-term price outlooks.Gold bugs were out in force as bullion prices reached a 23-year high of $506.50 a troy ounce on Friday, having moved through the $500 level earlier in the week for the first time since 1987. "In the short term gold is likely to oscillate around $500, but the next test will be the February 1983 high of $509.30. If that is broken it could attract another bout of buying," said Martin Stokes, vice-president commodities at JP Morgan.
The investment flows into gold, trickled down into silver, which struck a 18-year high of $8.60 a troy ounce on Friday. Platinum also reached a long-term milestone when it burst through $1,000 an ounce on Tuesday for the first time since January 1980.
However, Jeffrey Christian, managing director of CPM Group, a precious-metals research and consulting company based in New York, said the situation isn't that different from 18 years ago.
In 1987, "the dollar was bottoming out and people were rushing into gold and out of the dollar. Even banks were buying significant amounts of gold. We are seeing a very similar situation now," Mr. Christian said.
According to a recent study by the World Gold Council, an industry association of the world's leading gold-mining companies, investment demand for gold rose 56% in the third quarter and is expected to increase further.
As of this writing, Kitco shows that both gold and silver prices are up from last Friday's close, about 0.84% and 0.23% respectively.
What is interesting is that usually the U.S. dollar goes down when gold and silver go up. This time, however, the U.S. dollar has shown strength against most major currencies and both commodities are rising. I am curious to see what this week brings.
I am long Streettracks Gold Trust (GLD) and Pan American Silver Corp. (PAAS).
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