03 October 2011

Gold and Silver Revert to Type as European Stocks Sink on Greek Woes

European bourses sink on greek sovereign debt woes as Gold and Silver safe haven properties are back in demand again

Precious metals surprised investors on Monday with rises in Gold and Silver over 2% and 1.5% respectively. Gold fixed at $1,655 and Silver at $31.05 per ounce in the afternoon session. Gold and Silver reverted to a previously well rehearsed pattern, rising in the face of falling equity quotes caused by Greek sovereign debt woes. This pattern of safe haven buying had been absent in recent share sell off's as investors were forced to sell bullion to cover losses in equity markets. This apparent change in market behaviour, though during less extreme price moves, may indicate a turn in sentiment as the bullion market adjusts to higher prices.

Golds rise on Monday was even more impressive conisdering the dollar-positive economic data arriving from the United States, in the form of a rising ISM survey propelled by gains in exports and production.

Recent volatility in Gold and Silver prices have turned many retail physical buyers off the market, with activity at BullionSupermarket.com in September significantly lower than in August. However, for those buyers who did engage in auctions, they found there was much less competition. BullionSupermarket.com reported a ten percent increase in the ratio of number of auctions bid in to those won by users using the price comparison service.

Availability of physical Gold bullion remains tight, though occasional flushes of supply provides lower auction premiums. Physical Silver Supply also remains tight, though good supply of 1 ounce Silver on the auction markets at the currently provides some lower premium buying opportunities.

On Monday in the United States market, 1 ounce silver bars on a fixed price basis, were priced from 38.5% over fix. 1 ounce gold bars were priced from 38% premium, while equivalent auctions were completing at around a 4% premium.


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