The price of gold was well supported over the last two weeks partially due to the increase of almost 2 million ounces into the ETF funds. Silver, in the same period was going in the opposite direction, seeing small redemptions in the ETF each and every day.
Fresh gold fund buying overnight helping gold hold its positive position this morning. As we start the week, we see the dollar index in negative territory, also a positive for the gold price. Gold seems to have some momentum at these levels and becoming a trend setter helping silver to catch a bid also.
Technical levels of resistance in gold to watch for is $1,132 in the April contract and $14.48 in the March contract for silver.
We still await some clarity on last week’s wild silver fixing numbers. As I said last week and still believe today, the process is broken and I wonder if there is a fix for the “fix”? The price is supposed to reflect a benchmark price at the time of day so that all the producers, hedgers and speculators can trade on, but after last week’s disaster, many are trying to figure out another way to fix a price. Some are going to the CME settlement price. But I don’t believe that’s a good alternative because it doesn’t reflect a London price which all the producers’ yearly contracts are based on and all sovereign mints use to sell their products. So I guess only time will tell if everyone can rely on the fix again? Sometimes it’s better just to leave things alone. I’m told it worked for 117 years, they had to be doing something right.
Author Name: Walter Pehowich
Walter Pehowich is the executive vice president of precious metals investment services for Dillon Gage with over 38 years of experience in precious metals investment services. His career began in 1977 at Bache (which evolved to Prudential-Bache Securities and then Jefferies Investment Bank). While at Jefferies, he served as senior vice president with oversight of investment grade precious metal products. Pehowich holds a National Futures Association (NFA) Series 3 license, authorizing him to advise and sell alternative investments in commodities and futures markets.