Two main factors are to thank (or to blame if you are dollar heavy) for today’s precious metal rally:
- The US dollar took a major spill on Monday and Tuesday, and further downfall in the American greenback is expected throughout the week. After flexing some muscle early on in 2010, the juicing is over and the dollar’s value is thinning out once again. While gold tends to have the closest tie to the dollar out of all the precious metals (gold, silver, platinum, rhodium, and palladium), the full gamut posted gains this week directly because of the dollar’s struggles. Other commodities, like sugar and food, also become more valuable when the dollar moves downward, because it requires a larger amount of dollars to purchase the same amount of the commodity. If that doesn’t make sense, just think about pushing a wheelbarrow full of dollar bills to the grocery store in the hopes of purchasing one (1) loaf of bread. That’s dollar devaluation at its worst.
- Gold and silver surpassed key benchmarks this week, with gold regaining ground above $1100 and silver breaking through the $16 per ounce mark yet again. These levels were expected to be reached later in the year, because more profit-taking was expected in the first quarter. However, continued gains by both of these metals is strong evidence that the latest bout of profit-taking has subsided and that more individuals are buying into the precious metal market right now.
There is no way for us to know if today’s precious metal rally will continue, but experts from Citigroup and Bank of America Merrill Lynch believe that the next stable levels for gold will be around $1160 per ounce. If you want to take your position in the precious metal market, call or email Precious-Metal.org for a free investment tutorial and help from someone who can point you in the right direction.