29 November 2010

Gold Premiums Spike as price holds steady - Equities descend

Gold Premiums spike as precious metals trade marginally up in London tonight as equity and currency markets are hit by euro zone woes

We live in interesting times. The Irish bail out, rubber stamped over the weekend, proved a double edged sword for gold and silver bullion investors last week.

While some commentators had imagined investors would flee to precious metals from the embattled Euro, as the Irish bail out unfolded, Gold and Silver prices were in fact pressured last week by investor flight to the greenback in forex markets, which made Gold and Silver priced in dollars look less attractive to buyers in other currencies.

However as some seasoned Gold market watchers have pointed out, it could prove foolish to mistake technical selling for true bullion weakness.

Today the focus was on the Eurozone, as investors fretted (again) over when and if Spain and Portugal, and even Belgium (who's woeful problems so far have stayed below the radar of the popular press) would need a bail out too. The french finance minister was quoted as saying “irrational markets were not correctly pricing the sovereign debt situation in Europe". For some investors the adage "The market can always stay irrational longer than you can stay solvent" may well be more appropriate.

Against this backdrop, this week, Gold and Silver price moves could prove different to last, as today Gold held it's ground, even moving up, in the face of heavy selling of equities and a Euro still ailing against the dollar.

Users of BullionSupermarket.com appeared to concur with this sentiment as completed purchases of physical precious metal coins and bars on the Bullion price comparison service troughed on Saturday, with buyers returning to the market on Sunday. This followed a week of lower than average interest in Gold and Silver purchases, though possibly contributed to by the thanksgiving holiday in the US.

On Bullionsupermarket.com Gold Premiums were sharply up, Fixed price 1 ounce Gold bars in the US were trading at 21% on Monday up from 7.3% on Wednesdays.

Fixed price 100 ounce Silver was also priced with further elevated premiums at 16.98% over fix, up from 11.01% over the silver price on Wednesday.


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