Closing Gold & Silver Market Report – 9/23/2011
Gold Plunges $100 Before Rebounding – Gold prices fell as fears mounted of a global recession and hope of a positive end to the Greek crisis waned. It would be fair to say a small dose of panic was injected as well. At one point, gold was down 6 percent. Silver futures closed down 18 percent. In the crunch for cash, precious metals became just another commodity that could be sold quickly for cash. For the past two days anyway, gold did become a commodity and lost its safe-haven appeal.
It is interesting to hear traders talk about gold losing its safe-haven appeal. Of course, a trader has a very short timeline, often, just for the day. So, it makes sense that gold has no safe-haven appeal if your timeline is a day, week or even a month. However, if as an investor, your timeline is 3-5 years, I would think the safe-haven appeal might still be in play. From this writer’s point of view, the true value of gold is portfolio diversification. Over time, the negative correlation of gold to stocks or the dollar makes it a valuable component of any well-diversified portfolio. There are few analysts who would argue against a well-diversified portfolio, especially in volatile times like these.
The International Monetary Fund (IMF) is meeting over the weekend, but the mood will not be as upbeat as once expected. The IMF finds itself front and center in the European debt crisis and the Greek bailout. Philippe Le Houerou, of the World Bank stated,” Clearly the year coming is one of big uncertainty, slower growth in the euro zone and Eastern Europe will hurt the region as a whole.” Christine Lagarde, IMF Managing Director said, “As we gather inside these halls, the mood outside is grim. All across the world, people worry about their futures and their children’s futures. They are looking to us for answers.”
On that note, have a great weekend. Monday could be very exciting, especially if the Thursday-Monday pattern is in play.
At 4PM (CT) the APMEX precious metal prices were:
- Gold price - $1,659.90 – down $81.80
- Silver price - $31.04 – down $5.56
- Platinum price - $1,620.50 – down $93.10
- Palladium price - $636.80 – down $28.30