2013 continues to be a very interesting year for precious metals. Let’s take a look at some of the numbers from last week that tell us where we stand as we head towards the middle of August.
Last week was somewhat of a roller coaster ride for stock gold (GLD), going up and down, but ending the week right around where it started. Stock silver (SLV), on the other hand, had its best week in over a month. Declines early in the week were driven by the Fed’s changes to its bond buying program next month, but mid-week growth was driven by the weakened US dollar.
Specifically, gold ended the week up about a dollar at $1,314.70 an ounce, while silver’s price increased 3% to $20.56 an ounce (up from $19.89). Year to date, gold’s price is down 21.5%, while silver is down 32.3% for the year.
Both metals ended the week above the psychological benchmarks of $1,300 an ounce for gold and $20 an ounce for silver. However, August is historically a light month from a trading perspective, so trends should not be overanalyzed in either direction (positive or negative changes).
Gold demand, especially physical gold (as opposed to paper gold), continues to reach record highs in China. Chinese investors are buying as much of the precious yellow metal as possible, which is bad news for new investors, as this trend will diminish supply and increase the price of physical gold. However, the amount of gold imported to China has fallen off from where it was earlier in the summer. Regardless, China will still bump India out of the number one spot for gold imports across the globe.
China’s increasing demand and purchasing of gold is truly the most important story in the gold world this summer. Last week alone was the biggest outflow of gold into China from the SPDR Gold Shares ETF in a month.
On the other side of things, silver had a great week. Despite the tumultuous year for stock silver prices, 2013 will be a record year for physical silver coin sales from the US Mint. Demand for physical silver is also increasing globally, and with the Chinese gobbling up much of the gold supply, many people are turning to physical silver instead. The significantly lower price of physical silver also makes it more attractive and affordable for many people.
Last week showed us once again that the time to invest in physical precious metals is now, due to increasing global demand and relatively low prices.