• 394 days Will The ECB Continue To Hike Rates?
  • 394 days Forbes: Aramco Remains Largest Company In The Middle East
  • 396 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 795 days Could Crypto Overtake Traditional Investment?
  • 800 days Americans Still Quitting Jobs At Record Pace
  • 802 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 805 days Is The Dollar Too Strong?
  • 806 days Big Tech Disappoints Investors on Earnings Calls
  • 806 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 808 days China Is Quietly Trying To Distance Itself From Russia
  • 808 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 812 days Crypto Investors Won Big In 2021
  • 813 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 813 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 816 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 816 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 819 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 820 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 820 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 822 days Are NFTs About To Take Over Gaming?
Zombie Foreclosures On The Rise In The U.S.

Zombie Foreclosures On The Rise In The U.S.

During the quarter there were…

What's Behind The Global EV Sales Slowdown?

What's Behind The Global EV Sales Slowdown?

An economic slowdown in many…

GoldMoney

GoldMoney

GoldMoney

GoldMoney is based in Jersey, one of the British Channel Islands, which has a long-standing tradition of respecting private property. GoldMoney's shareholders are comprised mainly…

Contact Author

  1. Home
  2. Markets
  3. Other

Precious Metals Hold Their Own $Over Q1

Gold and Silver 2015 Chart

Gold priced in dollars hardly changed over the first quarter of 2015, but silver performed strongly, up 7%. In generally choppy markets across all asset classes silver was bettered only by the Nikkei 225 Index. This compares with the NASDAQ up 3%, the US long bond up 2.6%, and the Standard &Poors up 1%.

The consensus opinion that the dollar will continue rising is almost total, which is the other side of the gold trade. But while the dollar has risen, gold has not fallen: in other currencies it has gained, the principal exception being priced in yen, which has been consolidating against the dollar after last year's weakness. Gold priced in the other major currencies is shown in the next chart.

Gold YTD Chart

Being unchanged in dollars over the quarter, gold outperformed most other asset classes, with crude oil down 15%, the euro 12.2%, sterling 5.1%, and copper 2.2%. The performance of both gold and silver is against a background of growing pessimism about global deflation relative to the US, with the Managed Money (MM) category for gold on Comex increasing short positions to record levels, shown in the next chart which is updated to Tuesday last week.

MM Gold Shorts Chart

Hedge funds selling gold futures are buying the dollar and not necessarily expressing a view about gold, other than something has to be sold to buy the dollar. Therefore, if there is a change in sentiment against the dollar, this could have a dramatic effect on gold and silver prices because it would almost certainly trigger a substantial bear squeeze.

This market condition appeared to drive prices higher in trading on Wednesday, the first day of the new quarter. Up to that point a range of markets appeared weak ahead of quarter-end book-squaring, an influence that has now passed. Gold rose as much as $27, or over 2% on Wednesday before settling at $1204. Silver moved up as much as $0.55, or 3.3%, before settling at $16.95.

Overall, trading is subdued by the Easter break, with many markets closed on both Good Friday and Easter Monday.

Looking forward into the second quarter, the principal concern has to be the unanimity of opinion that the dollar reigns as king over everything else. The certainty with which the overwhelming majority of hedge funds, banks and other investors hold this view is reminiscent of investor psychology in September 1987, when just a few weeks' later equity markets suddenly crashed for no reason other than everyone was fully invested and no one left to buy. If the dollar does have a major correction, it should be reflected in an improved outlook for precious metals starting from a sound base.


Next week

Monday. Japan: Leading Indicator, Eurozone: Sentix Indicator. US: ISM Non-Manufacturing Index.
Tuesday. UK: Halifax House Price index, CIPS/Markit Services PMI. Eurozone: Composite PMI, PPI. US: IBD Consumer Optimism, Consumer Credit. Japan: Current Account
Wednesday. Eurozone: Retail Trade. Japan: BoJ MPC Overnight Rate, Economy Watchers Survey.
Thursday. UK: Trade Balance, BoE MPC Meeting and Rate Decision. US: Initial Claims, Wholesale Inventories. Japan: Bank Lending Data.
Friday. UK: Construction Output, Industrial Production, Manufacturing Production. US: Import Price Index, Budget Deficit.

 

Back to homepage

Leave a comment

Leave a comment