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.

Gold and silver found themselves in yet another very confusing week as closing metal prices changed dramatically from day to day. The beginning of the week looked to be great for precious metals but just as investors were beginning to lift their spirits, everything fell apart. By the time the week was over investors were left even more confused than they were at the end of last week.

Struggling Global Economies

If you thought the economic struggles in Europe were finished, you could not be more wrong. Confusing Italian election results are at the top of the list this week as Italian investors are more than frustrated with their government’s inability to even govern itself. Three candidates all finished the election with nearly similar percentages of the popular vote. The two front runners both had a little over 29% of the popular vote while the third place candidate finished with a little more than a quarter of the votes.

Additionally, the situation in Spain seems to be staying the same if not getting worse and speculators everywhere are wondering if Germany is going to continue to help struggling nations out. While Greece has not been mentioned in a while, make note of the fact that their government, too, is still in shambles.

China has been quiet as of late, giving credibility to the assessment that their once booming economy may be slowing down. Of course only time will tell if this is actually true or not, but early signs are a good indication that it is.

Federal Reserve Addresses Congress

It seems as though every few weeks the US Federal Reserve releases news that has significant affect on the value of precious metals. This week, people were anxiously awaiting Fed chairman Ben Bernanke’s speech to Congress because it was likely to have some impact on the price of gold and silver.

The main point of emphasis put forth by Bernanke was that the Fed’s pumping of money into the economy, also known as Quantitative Easing, will not be put to an end any time soon. This is seemingly good news for both gold and silver, but on the day the text of his speech was released gold moved backwards instead of forwards; a confusing result to say the least. Despite this, investment experts are still holding firm to the belief that gold and silver will see benefits from QE’s continued existence.

The Week Ahead

The main focus going forward is the struggle facing European economies. There are a multitude of nations that are in dire straights and many of them have little to no plan of action as to how they are going to remedy the situation.

Weekly Shift

Over the course of the week gold moved from $1,581 on Monday to closing at $1,578 on Friday. Silver, on the other hand, started the week at $28.81 and finished at $28.63.

Gold and silver both finished this week in much the same way they did last week, in very disappointing fashion. The United States was the main culprit behind precious metals continued decline as monetary news did a good job at kicking metals while they were already down.

Quantitative Easing to End…Possibly

Currently, the US Fed is increasing the supply of US dollars circulating in the public by way of a monetary policy they label Quantitative Easing, or QE. Whenever you have a surplus of dollars, the value of the dollar decreases; something that has been happening in the United States as of late. This activity may seem counterproductive to economic growth, but the way it works will change your mind.

The more dollars exchanging hands in the public spectrum means that the value of the dollar is falling, and thus, things are cheaper. This not only works on a Micro-economic scale in all of our individual households, it also works on a Macro level with imports and exports. If the things the United States produces are sold at a cheaper price, then more and more foreign buyers will purchase their products and before you know it…economic growth occurs.

It seems as though all of the aforementioned things have happened in a perfect mix because the main topic of discussion at the Fed’s meeting was the possibility of eliminating their QE program. This means that the value of the dollar will rise once again, and we all know that a rising dollar usually means bad things for the value of precious metals. The Fed postponed their actual decision on whether to cut QE until March however.

Speculation Running Wild

The fact that the Fed is waiting until March to make a final decision on QE means that investors are going to speculate to no end. This week the speculation went in the direction of a massive sell-off.

Whenever there are massive sell-offs like this, bargain hunters swoop in to grab gold when the getting is good. That is exactly what happened this week, but the increased purchase in precious metals was not enough to offset the massive decline.

Weekly Shift

At the end of the week, precious metals have taken a significant change from where they stood just seven days ago. Gold lost $29 dollars this week, shifting from $1,610 to $1,581. Silver was down roughly $1.19, falling from $29.98 to 28.79.

The week of February 15th will likely go down as one of the worst weeks for precious metals in all of 2013. Obviously it is a bit early to make such a prediction, but it isn’t every week that precious metals tests the waters of a 6 month low. This is all coming after many experts thought that this week would be fairly harmless for metals.

China Takes the Week Off

The first bit of news that affected gold and silver was the fact that China was taking the week off in order to observe their New Year. Because of this, demand for precious metals, especially gold, dropped off by quite a bit. China is a huge consumer of gold so any time that they are not in the picture will likely be trying for metals.

Luckily the Chinese will be back next week and will hopefully turn the tide of precious metals markets.

Much Anticipated G20 Meeting

The top 20 nations in the world were set to kick off a meeting in Moscow this week, a meeting that many thought would have little impact on the price of precious metals. We all quickly learned quite the opposite as a talking point in the first day’s discussions did well at knocking silver and gold down a few pegs.

The news was that the G20 pleaded with nations of the world to stop killing the value of their currencies so fervently. Their fear was that currency wars would break out and the whole economic platform would be turned on its head. The very same money wars that the G20 is striving to avoid are typically perfect for precious metals. Whenever we witness falling, devaluing currencies we also witness a booming precious metals market.

Moving Forward

As we try to get the memory of this abysmal week out of our heads, it is hard to imagine that gold and silver could slip much more. With the Chinese back in the picture next week we will hopefully see an improving outlook for precious metals, but as this week has shown, one can never really know.

Weekly Shift

By the time all was said and done on Friday, gold had declined by almost $60. It opened the week sitting at $1,668 and finished in a strikingly low $1,609 position. Silver didn’t fare well either as it dropped over a dollar and a half moving from $31.48 on Monday to $29.83 on Friday.

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