If you look at the charts regularly like we do, you’ve certainly noticed the recent uptick in gold, silver, platinum and palladium.
Our last market commentary indicated a correction in gold and silver was underway. That correction appears to be over considering both metals have made all-time highs once again.
(Gold’s bottom in this latest cycle appears to have occurred around the end of January at $1330 per ounce. Silver’s bottom appears to have occurred around the same time at $27.50 per ounce.)
In February alone, gold shot up 6% while silver rose an astonishing 19%!!
Just today in fact saw silver rise to a new 30-year nominal high of $34.44 an ounce. If you took advantage of silver in the last correction, your investment is certainly paying off.
Many factors are combining in this latest rally in precious metals. Ongoing inflation fears are fueling part of the strong demand for precious metals and commodities. Even Fed Chairman Ben Bernanke admits there’s risk of ‘modest and temporary’ price inflation in the coming months.
But the political upheaval in the Middle East and North Africa is commanding all of the attention now.
Mass protests as you know have occurred in a dozen or so countries with ones like Egypt culminating in the removal of long-standing leaders/dictators. Libya is currently a hotbed of activity along with Yemen, Iraq, Iran, Bahrain and a few other smaller scale protests. This instability is also part of the reason oil has seen a considerable increase in the last few weeks.
But as these protests and clashes are commanding much of the world’s attention right now, Europe’s sovereign debt problems are quietly bubbling under the surface. 2010 saw much financial instability in places like Greece, Spain and Ireland. Despite austerity measures in Greece, there’s renewed pressure on government bonds in that country (…as well as Ireland).
Other technical factors like exchange rates, credit spreads and other subtle economic signals also are influencing the direction of precious metal prices in fairly significant ways.
General consensus then points to further gains for gold, silver and other precious metals although the road getting there will likely be pretty bumpy. For the last several years, gold especially has been in this two-step forward, one-step back type routine.
