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Precious Metal Market

February’s precious metal market has both risen above, and dipped below $1100 per troy-ounce levels, continuing a tradition of volatile February gold prices that has become customary in recent years. After shooting radically to $1226 in mid-December of last year, many reasoned that gold was overbought and began to downplay the value of futures contracts. Still others thought gold spot prices would be around $1050 by the end of February, and some market analysts speculated that silver would fall below $15 per ounce by March 1. Gold, silver, and platinum all struggled during January and into the beginning of February, as profit-taking pulled gold to $1062, silver to $15.50 and platinum to sub-$1500 levels.

Gold has been quietly been climbing the charts over the past two weeks, ultimately reaching $1122 late last week. The market experienced a pullback this week after the Federal Reserve revealed plans to hold interest rates at zero, although most economists believe that Fed Chairman Ben Bernanke will have no choice but to boost interest rates soon, due to the growing threat of inflation.

February’s precious metal market has shown some negative movement in response to the news that the International Monetary Fund (IMF) is looking to gradually unload another 200 tons of gold onto the open market. The last time the IMF did this the gold was already earmarked for India’s central bank, without private investors getting a chance to bid. The way the IMF gold sale plays out should also have a bearing on the precious metal market as a whole, and whether the sale occurs in February, March, or December, you could expect to see volatile silver and platinum prices that same day, as was the case during India’s large buy last year.

Precious metals are traditional hedges against devaluing currency, and our US dollar definitely fits that description. If you want protection from the collapse of the dollar then give our advisors a call to inquire about setting up a hedge for physical delivery, as well as for qualified retirement accounts.

Jonathan Monroe

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