Gold and Silver Recap: Making Up Lost Ground

Another Precious Week in the Market

So the world’s returning to normal, and that’s a mild and slowly accelerating form of panic.  And all the precious metals are going up, at least against the dollar.

But there’s some bad news.  A load of tea partying gold bugs are heading to congress, and according to HSBC that’s bad for the price of gold.  Not really much evidence from their actual policies, but there’s a “loose correlation” between the gold price and democratic control of congress.

There’s also the Indian festival season which accounts for a stunning quarter of annual gold sales in India (a massive gold market).  This is good news, but Diwali is when it ends – and this year that’s Friday the 5^th.  As the gold that is purchased is physical gold, then this is done for the year.  That’s a bit of a tighter correlation.

But there’s another piece of “news”, the London based Financial Times – a business paper that is essentially of the left (and the British left at that – so quite far left in American terms) has said that gold is a buy because the Chinese want it.  Well, actually when you look at it it’s an opinion piece written by David Hale of David Hale Global Economics, and although he sounds certain about the Chinese wish to project financial power and the Chinese consumer’s wish to protect him or herself from inflation, it’s based on conjecture.  They are useful signposts – and we should watch for them, but it’s not a sure fire prediction.

Palladium is the metal to watch at the moment (which probably will mean to watch … going down).  It was the only metal that held up last week, and it’s gone up considerably this week.  Palladium is driven by the demand for automobiles as well as having a Russian supply issue.  That is the Russians aren’t that keen on supplying it.

From undoubted manipulation, to probably imagined manipulation, the silver prices is not the star of the show this week.  There is some fevered speculation that there is another Bunker Hunt style cornering of the silver market.   Yes, it can happen, but look at what happened to those who tried it.

Platinum has been the most subdued of the precious metals this week, although there seems to be some radical restructuring of that particular industry with the world’s largest producer, South Africa’s Anglo Platinum going into “negotiations”, although it’s not clear what that is.  As they’ve recently been increasing output then it’s hardly likely to be closing the joint.