Gold & Silver Building A Firm Base As Interest Rates Move Higher
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Stuppler & Company is proud to provide our clients this Weekly Market Report (WMR). The report gives you my overview of the prior week’s precious metal and rare coin market activity and news. In each WMR I share the current status of Gold and Silver along with their support and resistance levels. |
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This Week's Headlines: |
Last Wednesday, the Federal Reserve released the minutes from their December meeting. Those minutes clearly stated that the Fed sees a tight labor market and higher inflation in the U.S. This requires the Fed to provide faster rate hikes and a reduction in the central bank’s overall asset holdings. That news quickly drove the equity markets and precious metal markets lower. The interest rates moved sharply higher and Gold dropped $20 from the day’s high of $1,830 per ounce. Gold continued the drop in overseas trading Thursday, as U.S. interest rates were rising. Gold reached a low of $1,781 before seeing sizeable bargain buying on Friday. Gold closed the week at $1,796 per ounce, down $31 since the beginning of the year.
I want our American clients to remember that Gold is real money. The reason the Gold price goes up is to reflect the loss in purchasing power of the U.S. Dollar. In other words, the rising price of Gold is correlated inversely to the U.S. Dollar’s actual purchasing power loss. History has shown us that Gold moves dramatically higher after the effects of inflation have settled in and have taken their toll – not before and not in anticipation of those effects. We have just started to see the effects of higher product/services and wage inflation.
As we start 2022, demand for popular numismatic and bullion Gold and Silver coins has never been higher. The U.S. Mint will produce many exciting new semi-numismatic coins that will increase demand from new collectors. The 100th Anniversary 2021 Morgan and Peace MS70 Six Piece Silver Dollar Set became our largest selling new issue coins. The numismatic coin market showed sharp increases last year, with many of the rare Gold and Silver coins selling for record prices. With very little supply of coins available, I don’t see these markets easing up in 2022.
Today: This morning, as interest rates move to record highs (10-Year Treasury at 1.8%), and the equity markets move lower, Gold is holding its own. For the most part of today’s trading, Gold is trading in a $10 High/Low range from $1,790 to $1,800 per ounce.
Last week’s negative reaction to the release of the Federal Reserve minutes affected the Silver price more than Gold. Silver reached an unbelievable low of $21.93 early last Friday morning during early European trading. The price did bounce back when U.S. markets opened later in the day. Silver closed last week at $22.39 per ounce, down $0.94 per ounce since the beginning of the year. The Silver-To-Gold ratio is sitting at an unbelievable 80.63-to-1 ratio.
Today: Higher interest rates are also putting pressure on the Silver markets, but strong demand from bargain buying is helping to provide price support. Silver is trading in a range from $22.22 to $22.50 per ounce.
