Market Summary —
April 2006
Gold, silver, palladium, and platinum all rose in April following steady gains from the previous month, with gold tapping a 25-year high near $650 an ounce by the month’s end.
While gold, silver, and platinum remained relatively flat during the early part of the month, palladium experienced early gains that were largely sustained throughout April, closing the month at a per-ounce price just above $360. Prices for all four metals jumped up sharply mid-month on news of rapidly rising oil prices, with silver gaining nearly 20% to reach $14.70 at closing on April 19.
| April Spot Price Summary (U.S. Dollars) | ||||
| Silver | Gold | Palladium | Platinum | |
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| High | 14.72 | 654.25 | 376.00 | 1151.00 |
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| Low | 11.53 | 585.50 | 339.00 | 1071.00 |
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| Open | 11.66 | 587.50 | 341.00 | 1071.00 |
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| Close | 13.08 | 652.00 | 376.00 | 1145.00 |
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CONTENTS
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Market Summary - April 2006 |
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The Road Ahead - Can the Precious Metals Boom Last? |
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How to Know if Bullion is Right for Your Portfolio |
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Precious Metals Worldwide News |
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April Silver
April Gold
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The Road Ahead —Can the Precious Metals Boom Last?
The across-the-board rise in precious metal prices over the last several months has generated interest and excitement among seasoned market watchers and first-time investors alike, all hoping to cash in on historic upward trends in these commodities. The question remains — can the remarkable gains in precious metals continue past the first quarter of 2006, or is the metals market overdue for a major correction?
While nobody can say for sure, the experts agree that current global economic and political trends favor a continued rise in precious metals over the course of the next several months. Analysts quoted in a market report for the international news service, Reuters, on May 2, 2006, indicated that sensitivity to rising oil prices, a relatively weak U.S. dollar, and the growing threat posed by Iran’s instability, have pushed futures for gold, silver, platinum, and palladium upward.
Taking a longer-term view, some analysts see the precious metals market continuing to gain steadily through 2010. An article appearing in the April 28, 2006 edition of the London-based publication MoneyWeek hinted at a sustained metals boom lasting several more years.
In the midst of all of this uncertainty, one thing is definitely clear. Those who see higher oil prices, mounting inflationary pressure, and continued turmoil in the Middle East are the first in line to put significant portions of their portfolios into precious metals.
When compared to stocks, precious metals have historically demonstrated much closer ties to changes in the global political situation. This was certainly apparent in April, when stock markets worldwide barely flinched in the face of record crude oil prices while gold, silver, and other precious metals rocketed upward on the same news. Given all of the factors listed above, precious metals seem likely to follow along the current trend, at least through the second quarter of 2006.
How to Know if Bullion is Right for Your PortfolioPrecious metals have been getting a lot of attention lately, and with good reason. Throughout the first quarter of 2006, market prices for the four major precious metals, gold, silver, platinum, and palladium, have risen steadily, with gold prices reaching their highest levels since the early 1980s.
Many investors, even those who have made up their mind to get in on the recent precious metals boom, are wondering if bullion is the right place for their money. Faced with investment alternatives like mining stocks, metals futures and options, and exchange traded funds, it takes time to determine if bullion is the best fit for your portfolio.
Listed below are some things you should consider:
Risk Tolerance
Assessing your individual risk tolerance is the key to sound investing. Bullion offers a relatively low downside risk and is often favored by those who are looking for an investment that is less likely to change dramatically in value from one day to the next.
Inflation Protection
One of the biggest advantages to owning precious metals is their solid performance during periods of high inflation. Gold, for example, has long had a reputation as a reliable hedge against inflation or as a substitute for fiat currencies. With current economic forecasts predicting inflation looming on the horizon, bullion has become an increasingly popular investment choice.
Liquidity
Bullion coins and bars are among the most easily liquidated commodities you can purchase. Banks, brokerage firms, and other market makers in bullion are always looking to buy and sell these products regardless of market conditions. If liquidity is a priority, bullion is hard to beat.
Diversification
Tangible assets like precious metal coins and bars are a practical vehicle for portfolio diversification. Determining just how much to allocate to bullion products is largely based on individual preference, but financial planners typically recommend between 5% and 10%. If your portfolio is top-heavy in a particular market sector, bullion products offer an affordable way to gain exposure to rising precious metal prices.
Precious Metals Worldwide iShares® Silver Trust Now Being Traded on AMEX
On Friday, April 28, 2006, Barclay’s Global Investors launched its innovative iShares Silver Trust, the first-ever investment fund backed by silver. Trading under the symbol SLV, it has been touted as a widely accessible vehicle for exposure to rising silver prices, allowing investors the ability to take even modest positions in silver without actually owning the physical metal. Although definitive conclusions are premature, analysts do predict a noticeable increase in demand for silver will result, exerting upward pressure on silver prices.
Gold Price Rises on News of Indian Shortfall
India’s Hutti (HGMC) gold mining company recently announced a near 20% decline in its production levels compared to last year’s numbers. According to a recently released statement, the company, which is owned by the Indian government, recorded 2,892 kilograms of gold output through March of 2006, down from 3,500 kilograms in 2005. The announcement contributed to a rise in the per-ounce price of gold on world markets at the end of April.
Increased Demand for Palladium Likely to Continue
In December of 2005, General Motors, the world’s largest automaker by volume of sales, decided to start designing car exhaust systems that rely on palladium instead of the more-expensive platinum. Many other American car manufacturers are now following suit. Platinum, which is still nearly four times as expensive as palladium, has enjoyed a sustained rally over the past several years, with its price nearly doubling since 2002. As worldwide demand for palladium heats up, however, analysts predict that platinum’s rapid rise may be nearing an end, adding credibility to speculation that the per-ounce price of palladium is set to rise considerably throughout the remainder of 2006.
Information provided here should not be considered as advice or as an offer or enticement to buy, sell or trade. The contents of this publication, including any opinions and analysis, are strictly intended for educational use. Furthermore, information obtained from all quoted sources is believed to be reliable and is offered in good faith. Northwest Territorial Mint does not accept responsibility for any trading losses incurred from reliance upon this information. Readers are encouraged to consult with a financial advisor before making major investment decisions.