Closing Gold & Silver Market Report 5/18/2012
GOOD DAY FOR GOLD, BAD DAY FOR STOCKS
It is generally a safe bet to say that Gold and the American dollar do not move in the same direction, but that trend has not held the past couple of days. Gold bounced sharply off lows, while the dollar continued to go up. Perhaps Gold has decoupled from risk assets and is again attracting investors looking for a safe haven. Certainly there has been disconcerting front page news of late. JPMorgan lost $2 billion and now it turns out they have an additional $100 billion tied up in similar risky bonds. Chesapeake Energy is under intense scrutiny for loans made to its chief executive. Moody’s downgraded 16 Spanish banks, and Greece must have another election to decide how to deal with an impending economic collapse. U.S.A. stocks experienced the longest weekly down streak of 2012. The much ballyhooed Face book Initial Public Offering occurred today and by most accounts fell flat on its face. There are record low mortgage rates, but no housing recovery.
The 10 year U.S.A. Treasury bonds are the go to safe haven play at the moment, despite paying historically low rates under 2 percent. If an investment is paying under 2 percent, it has a high probability of paying a negative real rate of return (factoring in inflation). Gold historically is a safe haven play and not a risk based asset. It would not surprise many investors if Gold continued to decouple from risk assets and return to its investment roots as a protector of wealth in difficult economic times.
At 5 p.m. (EST), the APMEX Precious Metals prices were:
- Gold, $1,593.30, Up $16.90.
- Silver, $28.74, Up $0.65.
- Platinum, $1,456.00, Up $0.60.
- Palladium, $605.00, Down $2.90.
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