Odd, Another Opposite Reaction, Gold and Silver Trade Lower...
Today’s government shutdown and the looming threat of negotiating over the debt ceiling should drive gold and silver higher. However, not unlike what we saw during the first week of the Sequestration in March, gold and silver have been sold off. Silver is holding better than gold against the onslaught having dropped only 2.56% while gold is down nearly 3%.
Do I think for investors in precious metals that this is a time to panic? I don’t think so and I’m certain that neither do they believe it. Last time we saw this type of reaction in a few weeks the metals had rallied to significantly higher level. But picking the right time to come back in is a matter of timing.
Still the facts are the facts. Gold is trading at $1288 per ounce and silver at $21.15 an ounce. I would hold off buying at these levels and watch for any weakness. Any further large drops to the downside would be only opportunities to buy.
Silver is being looked at as the better of the two at the moment due to the continued disparity in the ratio. Silver investors are looking for the ratio to trade down from these levels which is currently at 60.9:1 whereas they expected to trade down to 50 ounces of silver per ounce of gold.
On the BullionVault exchange we have seen strong buying of silver over selling for a significant period of time. Especially the last three months. In the market based on U. S. dollar buying we saw buying exceed selling by as much as 50%. This is a strong signal that the individual investor has moved into silver over gold due to the perceived discounted value versus the gold price.
In the way is a price of gold moves down I believe we will see increased buying from the individual investors in both gold and silver but with a predominance in silver. The simple reason it will continue is a lack of confidence in the federal government of properly managing our debts.-Miguel Perez-Santalla
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