If you entered this week hoping for good news from the metals markets, your wishes were definitely not answered. With US stock markets surging forward it was hard for gold and silver to get any sort of beneficial foothold this week. While we have seen worse results for metals only a few weeks ago, this week was nothing to write home about.
Fighting US Stocks
If you reside in the United States, all you have heard for the past few years is that economic recovery is right around the corner. For the longest time this phrase seemed more of an ideological thought than one based upon fact or reason, but this week seemed to change all of that.
While, over the past few months, the US economy has begun to recover from its recent recession, ample signs of improvement were few and far between. This midweek saw the Dow Jones reach an all-time record high and despite many thinking this high would only be short lived, US stocks have managed to maintain their stellar results. Good results on the stock market may help the average American, but it really hurts most precious metals investors. The reason it hurts them is because more trust placed upon stocks means that investors do not have to fall back on the safe investment opportunity that metals usually are. Instead, investors are taking their chances on riskier stocks during this period of economic resurgence. With that being said it is important to note that not every financial market is doing so well currently.
Metals Flourishing Abroad
While precious metals investors in the US have struck relatively hard times, investors in countries like Japan and Brazil are seeing precious metals maintain a strong holding. The reason why these two countries (and many other ones for that matter) are having such a great time with precious metals is because of their respective currency devaluations.
In order to be able to compete at a higher level, many nations are devaluing their currencies in hopes of an increased number of exports. The devaluation of a given currency is in most cases terrible news for the average citizen, but to an investor of precious metals it is music to their ears. Whenever people begin to lose faith in their dollar, they turn to more reliable methods of storing their assets, and for thousands of years gold and silver have been that reliable investment method. So long as the value of currencies continues to fall, precious metals markets in these corners of the world will flourish.
The Week Ahead
While this week was not as much of a tragedy as a few weeks prior, it was definitely a disappointing one. All eyes are set on the week ahead and investors in the US are hoping for a lull in the impressive run of the stock markets so that precious metals have a chance to once again regain their superior foothold.
Weekly Shift
From the time the markets opened on Monday to the time they closed on Friday, silver had moved from $28.68 to $29.02. Gold moved from $1,579 on Monday to $1,580 at closing time on Friday.