Afternoon everyone ….
Just in case you haven’t looked at the market today. The precious metals market is getting crushed.
Why???
One of the reasons is the United States Dollar Index. It’s back to 103.55, from a low of 100.28. While that doesn’t seem like a huge difference, it truly is a big deal.
See there are eleven countries that use the US dollar as their currency. There are also another sixty five that peg their currency to the US dollar.
So the dollar getting stronger and having more buying power is significant to the day to day spending of more then just the US. A stronger US dollar means more goods can be purchased for less money.
But how does this affect gold and silver….
When the buying power is strong, no money is going into gold or silver. It is being used to get more goods for less. When the dollar is falling, they put money into gold and silver to preserve the buying power of their money.
Does this make sense to you?
So let’s take a look at the charts today from the Bullion Vault.
In two days now gold is down over $40. Today gold is down over $23, currently sitting at $2,004. At this point I believe the $2,000 barrier will be breached this week. If it breaches the $2,000 barrier and closes below that. We could see an even bigger drop into the mid $1,900’s.
Silver is pretty much following gold drop by drop. Silver has dropped over $.70 in two days and is down nearly $.40 today alone as I write this post. If gold breaches the $2,000 barrier, I definitely see silver breaching the $22 barrier as well. Silver is a more volatile metal and typically has bigger spikes and dumps than gold. Silver is currently sitting at $22.50, I can easily see this dropping another $.50 if gold breaches the $2,000 barrier.
What do you think?