Gold, platinum and palladium all advanced on the week while silver gave up most of the previous week’s gains.
As measured by the London PM Fix Price, gold gained $7 on the week to $1,540.00 while silver pulled back by $2.50 to $35.19. Platinum moved up by $21 to $1,807.00 and palladium gained $13 to $770.00. After the London close, prices of precious metals moved up strongly in New York trading, especially silver, which last traded at $36.39, up $1.20 from the earlier London closing price.
Financial markets worldwide pulled back sharply as the stock traders finally began to acknowledge the fragility of the world’s paper back financial system. Governments that have borrowed and spent trillions of dollars to stimulate economic growth and support a fragile banking system now find themselves reaching the limits of their borrowing capacity.
It is becoming obvious that the financial crisis of 2008 was just a warm up act to the real financial nightmare that is looming ahead. Despite trillions of dollars in stimulus spending, coordinated with a money printing campaign by world central banks, the economies of the U.S. and Europe have not recovered. Unemployment continues to grow, real estate values continue to plunge, debt levels have reached unsustainable levels and real incomes for the majority of workers continue to decline.
There are numerous events that could trigger the second financial crisis There is no way of knowing which specific event will trigger the next crisis, nor does it matter. What does matter is the manner in which Financial Crisis II will be dealt with by world governments and central banks. Unable to raise taxes or take on trillions more in borrowing, monetary authorities will exercise the last resort option of money printing on a massive scale to avoid a total collapse of the world monetary system. The gold market is already reflecting this scenario as one of the few safe havens against paper currencies that have little intrinsic value. When Financial Crisis II gets under way, uninformed talk of a “gold bubble” will quickly disappear as investors will buy gold at any price to preserve their wealth.
| Precious Metals Prices | ||
| PM Fix | Since Last Recap | |
| Gold | $1,540.00 | +7.00 (+0.46%) |
| Silver | $35.19 | -2.50(-6.63%) |
| Platinum | $1,807.00 | +21.00 (+1.18%) |
| Palladium | $770.00 | +13.00 (+1.72%) |
Will platinum, which has lagged the price rallies in other precious metals, start to play catch up? According to the Wall Street Journal, due to rising production costs for platinum, a price of $2,100 per ounce is necessary to encourage increased mine production.
The historical price ratio of platinum to palladium also suggests that platinum prices could rally significantly. The Wall Street Journal notes that when palladium reached $860 per ounce in February, the ratio was 2.15 compared to 2.12 today. The historical average of the platinum/palladium ratio is 3.0 to 4.0, suggesting that platinum is undervalued.
PLATINUM - COURTESY STOCKCHARTS.COM
Commodity and precious metal prices tumbled this week, with gold and silver prices snapping a streak of four consecutive weekly increases. Following the recent run up in prices, there had been some anticipation of a correction. In addition, there were concerns that the Fed’s announcement of the end of QE2 would result in an end to the flood of cheap money which has fueled the rise of commodities.
As predicted on Monday, the Federal Reserve policy meeting and subsequent press conference by Fed Chief Ben Bernanke had the potential to cause an explosive move up in the precious metal markets. (see 
Anything but paper dollars was the theme this week as investors rushed into anything of tangible value. Gold, silver, oil and commodities of all types have been skyrocketing since last August when the Federal Reserve announced its second round of quantitative easing.
Gold and silver prices, as measured by the London PM Fix Price, moved to new highs on the week.
As measured by the London PM Fix price, gold and silver prices gained on the week after declining approximately 1% each in the previous week. Gold gained $8.50 per ounce on the week to $1,420.00. Silver was the stand out gainer on the week with a 3% or $1.05 per ounce gain. As the situation in Japan and Libya stabilized somewhat, the recent panic selling in financial markets subsided as bargain hunters moved in, although in late trading, stocks gave up much of their gains. Gold and silver also pulled back slightly in New York trading with gold at $1417.80 and silver at $35.10.
As turmoil reigned in the Middle East and worries mounted over the reduction of oil supplies, gold and silver proved their safe haven status as both moved higher in price.
