Easy come, easy go. Gold and silver prices received a boost last week as Federal Reserve Chairman Ben Bernanke appeared to place more quantitative easing back on the table. However, these gains have been erased as the Fed continues to play with the hearts of investors.
The financial system serves as a global high-speed economic highway that is filled with many obstacles. Being the world’s reserve currency, the US dollar is the truck that is one good bump away from losing control and crashing, causing a chaotic financial wreck.
While investors appear to be more sensitive to gold prices, CPM Group expects gold prices to stay above $1,500 this year and above $1,400 over the coming years. The report cites large debts and currency market volatility as issues providing support for gold prices.
While short-term corrections in bullion prices can be frustrating for investors, the pullback in miners has been even more pronounced. In the past month, the Market Vectors Gold Miners index declined almost 11%, while the Market Vectors Jr. Gold Miners index has fallen 14%.
The company has been parking excess cash in silver and gold on a short-term basis since 2008. Instead of falling victim to the volatile silver market, Endeavour “elected not to sell a significant portion of its metal production..."
Now, even the most environmentally conscious investor lacks a reason to not invest in silver as "complex sulfide ores go in, pure metals come out, without a molecule of contamination released to the environment."
While gold and silver have struggled in March, this appears to be momentary breather from their decade long winning streak. Inflation and budget concerns still persist and more debt-based solutions will only add to the problem.
Earlier this week, Gold Bullion International announced a new service called The GBI Physical Dividend Program. The program allows publicly-traded companies to pay dividends to shareholders in the form of physical precious metals.
According to Bloomberg, hedge funds decreased bets on higher commodity prices for the first time in seven weeks. This comes shortly after China cut its official economic growth forecast to 7.5% this year, the lowest since 2004.
It has been a rough week for precious metals. On Tuesday, renewed Greek concerns drove gold down $32 to close at $1,672.10 per ounce. It was gold’s lowest close and first time settling below $1,700 since late January.