Daily Precious Metal News

Many times, investors watch as the US dollar rallies and precious metals fall; or better yet, see a tumble by the dollar and a run by precious metals. While there are still factors that lead to an inverse relationship, the current economy is not bound to that tendency; in fact, lately there have been more short cycles where the rise and fall has come in unison.

After years of believing that precious metals and the dollar react against each other, why would things be so much different today and how does that help the investor in gold, silver or platinum?

First, metals appear to have entered some sort of a correction period. The gold spot price has lost between $125 and $150 per ounce against the all-time high of late November, and both silver and platinum have seen broad price swings as of late. The factors that will likely help turn prices around for metals are still in place and many analysts are still looking for a strong period of growth that could easily eclipse the previous high.

Second, the dollar is still an attractive currency in spite of its problems. A large number of foreign investors have been returning to the dollar since currencies in Greece, Portugal, Italy, Spain and other countries are even more unfavorable. This confidence is keeping the Dollar Index slightly elevated and leading to increased activity.

With prices corrected downward, now could be a very good time to invest in precious metals, even if the dollar is rising. The key is to proceed slowly as trading is increasing and volatility has been more drastic. For investors who are looking ahead and making early buys and sells, this time could be a great opportunity to take new positions in the precious metals markets. 

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Danny Burns

Senior Staff Writer - Precious-Metal.org