APMEX | Daily Gold & Silver Market Report – 12/07/2016

PRECIOUS METALS PRICE TRENDING

Most of the change in prices for Precious Metals has stemmed from inflation expectations. For instance, if oil prices start to decline, inflation may follow, which could result in a lower chance of an interest rate hike. It’s obvious that higher interest rates affect Gold prices, meaning decreased chances for a rate hike could help buoy Gold and the other three Precious Metals. However, Meera Shawn with Market Realist says a December rate hike is likely. So what does that mean for Precious Metals? Well, they are expected to possibly drop. There has been heavy selling in the ETF market primarily due to the increased strength of the U.S. dollar. Shawn stated “Gold and Silver [ETFs] have fallen 10.3% and 9.1%, respectively, on a 30-day trailing basis.” Mining stocks, such as Pan American Silver (PAAS) and First Majestic Silver (AG), have survived the Precious Metals decline over the past month. Conversely, most Gold miners have not had the same luck and have actually fallen on a 30-day trailing basis. In addition to all of this, it’s no surprise that President-elect Donald Trump is still the main headline for many different reasons, including the equity market. Shawn said, “Dow futures plummeted by hundreds of points when it began to look as though Donald Trump would win.” Following a quick spook from the markets due to the unexpected outcome, and a brief rise from Gold for the same reasons, both the stock market and the yellow metal reversed courses in a few hours.

MILLENNIAL OIL PLAY

Shawn Langlois with MarketWatch explains the “wickedly volatile oil play [Credit Suisse’s Velocityshares 3x Long Crude ETN, UWTI] that emerged as the “YOLO” favorite of millennial traders in recent years is just days from being delisted, and, as one might expect, it’s not going away quietly. … UWTI, which will still trade over-the-counter after its delisting, exploded in popularity last year as a means to get leveraged exposure to fluctuations in the oil market.” In 2015, TD Ameritrade listed UWTI as the fifth-most-traded stock by millennials while it didn’t even crack the top 10 with older investors. Nonetheless, UWTI is not being looked at as a long-term play. According to Wall Street Bets creator Jaime Rogozinski, “It was simply the leveraged synthetic derivative of the month,” adding that members are more focused on Donald Trump at the moment. Langlois continued, “Perhaps another oil play will emerge to fill the void. Just two weeks after Credit Suisse announced the UWTI delisting, U.S. Commodity Funds filed a preliminary prospectus for a triple-leveraged exchange-traded fund linked to light, sweet crude futures.”

SILVER IS BEATING GOLD

Similar to the June 23 Brexit vote, Italy staged a vote rejecting a call to make the Prime Minister more powerful. This vote is just one of several pointing toward the eventual weakening, or altogether disbanding, of the European Union, which will in time hurt the euro. As a result of such votes, European banks have increased their 2017 Silver price projections of Silver. Townhall Columnist Mike Fuljenz says that in the past, “Silver has tended to rise or fall in tandem with Gold, but Silver will usually rise or fall much faster than Gold.” This has been true in 2016, as Silver has outperformed Gold and Platinum, up over 21 percent vs. about 11 percent for Gold and 4 percent for Platinum. Fuljenz said, “The reason Silver tends to rise or fall faster than Gold is due to its narrower market, so that a small increase in Silver demand can generate large percentage price gains.” Silver industrial fabrication alone has grown by more than 50 percent in six years, from barely 400 million ounces in 2009 to more than 650 million ounces in 2015. Fuljenz ended saying, “The growth in industrial Silver presentations is fairly steady over time, but the most dynamic component of the Silver price equation is investment demand.”

At 11:26 A.M. (ET), the APMEX Precious Metals spot prices were:

  • Gold, $1,214.80 Up $8.10
  • Silver, $16.64 Up $0.41
  • Platinum, $931.00 Up $10.20
  • Palladium, $726.00 Down $2.10

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