Silver as an investment

Market Report: Gold in the Post-election / BY ALASDAIR MACLEOD / FEBRUARY 03, 2017

Gold and silver resumed their uptrend this week to challenge recent highs, last seen on 23 January.

The best levels were mid-week, before some end-of-week profit-taking took place. In early European trade this morning (Friday) gold was trading at $1213, up $22 from last Friday’s close, and silver at $17.33, up 20c. Gold is up 5.5% and silver 9.5% on the year so far and must be among the best performing asset classes. Can this be sustained?

The current spurt comes at a time of dollar weakness, on profit-taking following the post-Trump election rally. There is little doubt that the post-election euphoria is wearing off somewhat, as the markets digest the unprecedented pace of executive orders being issued from the White House, some of them pregnant with unintended consequences. However, it is too early perhaps to call a top for the dollar measured against other currencies. Gold’s performance in the four major currencies is the subject of our next chart.

Something extraordinary has happened in recent futures trading. Open interest peaked at 483,408 contracts on Comex on 23 January, the day gold hit its January high. As the market consolidated, open interest collapsed to 391,449 by Monday, while the gold price lost only $20. Preliminary figures for last night (Thursday) showed gold’s open interest had recovered a little to 403,133 contracts.


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