Spot prices for all four major precious metals – gold, silver, platinum, and palladium – followed virtually the same path in January, starting strong, losing ground mid-month, and rising steadily in subsequent trading sessions. Gold led all precious metals, with gold spot matching a 6-month high just above $654 on the last day of trading in January. After reaching its highest level since mid-December at $13.54, silver spot eased to $13.33 to close the month. Platinum's strong overall performance in January was attributed to strong physical demand in Europe and Asia. The same held true for palladium, which rose to a high of $356 on January 25 before retracing to close at $340.
Gold/Silver Ratio
Beginning the month hovering near 49, the gold/silver ratio – or the quantity of silver in Troy ounces required to purchase an ounce of gold – touched a high of 50.6 early in January before sliding to just above 48 to close the month.
| January Spot Price Summary (U.S. Dollars) | ||||
| Silver | Gold | Palladium | Platinum | |
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| High | $13.54 | $654.40 | $356.00 | $1183.00 |
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| Low | $12.13 | $604.08 | $328.00 | $1108.50 |
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| Open | $12.96 | $636.30 | $335.00 | $1139.50 |
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| Close | $13.33 | $645.70 | $340.00 | $1170.00 |
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CONTENTS
ABOUT NORTHWEST TERRITORIAL MINT PRECIOUS METALS MONTHLY
Combining market summary information and insightful analysis, this publication offers an insider’s perspective on the numbers, trends, and moves that drive the precious metals market, allowing you to stay on top of the most important investment news each month without investing hours of your precious time.
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CHARTS
The following charts display the daily low and high spot price of each metal for the month of January, 2007. Source: Northwest Territorial Mint spot prices as posted at nwtmintbullion.com.
The following charts display the daily spot price range of each metal for the six months ending January, 2007.
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Is Gold Stalled or Poised for a Breakout?
by Ross Hansen
Gold showed remarkable resilience in January, rebounding after a mid-month slide to reach stability in the $640 range. Gold even matched a six-month high of $654.40 this past month before consolidation pared gains. Though gold's late-January rise surprised many analysts, the big question remains: does this recent surge in the gold price signal the beginning of a sustained upward trend, or is it a short-term response to the usual triggers?
Has Gold Met Expectations?
When the dollar hit a 20-month low against the euro and other rival currencies last December, many analysts revised their gold forecasts upward. Some even speculated that gold could reach the $700 mark by the end of January 2007. Though gold spot fell shy of this target, it never fell below the $600 threshold, despite a strengthening dollar and more robust oil prices. Though some analysts have pointed to gold's inability to push past the resistance level of $660 as a sign that it's not positioned for a big price move anytime soon, others see its performance in January (and over the past three months) as evidence that the bull market for gold is just heating up.
Will a Stronger U.S. Economy Hurt Gold?
Despite much talk and speculation about recession, the U.S. economy is still fundamentally strong according to many analysts; it may actually be getting stronger. A collection of new economic data, including a near-5% rise in the number of new housing starts in December 2006, GDP growth in the fourth quarter (2006) of 3.5%, and a smaller-than-expected rise of just 0.2% in the core inflation rate, all placed downward pressure on gold in mid-January. But despite these factors, gold still traded strongly in the $630-$650 range for the second half of the month.
Many analysts have stated that this actually suggests the potential for a strong upward price move for gold in the long-term. Moreover, some experts have predicted that the housing, manufacturing, and retail sectors are due for serious corrections in the near future. If this comes to pass, most commodities experts agree that more and more investors will turn to gold as a stable and tangible asset.
The Impact of Bargain Oil
Though crude oil reflected a stronger price by the end of the month, it languished in bargain territory for most of January. In fact, many commodities experts scratched their heads, wondering why the price of oil remained as low as it had for so long. Typically, suppressed oil prices place negative pressure on the spot price of gold. But during this past month, gold shrugged off low oil prices. In fact, when oil dipped to $54 per barrel on January 14, a multi-month low, gold actually moved higher. On January 31, oil prices pushed past the $58 mark, and many experts have forecast a continuation of this rising trend. On news of higher oil, gold spot also rose on January 31, matching its high for the month, while gold for April delivery rose by more than $8 per ounce.
What About Gold in the Long-Term?
Uncertainty and risk are the underpinnings of every market; the market for precious metals is no different. While no one can say for sure whether gold's recent gains signal the beginning of a long-term upward trend, it is important to remember that gold has continued to perform well over the past several weeks despite adverse conditions, including a strengthening dollar and the surprising overall strength of the U.S. economy.
Ross B. Hansen
CEO, Northwest Territorial Mint
Ross Hansen is the founder and CEO of Northwest Territorial Mint and has more than 30 years of experience as a precious metals trader and broker.
Both Gold and Silver Set to Shine in 2007 by David Morgan
This month I just returned from the Vancouver Resource Investment Conference and it was the biggest conference I have ever seen. Keep in mind that I have been going to events like the Silver Summit and other international events for years. Much of the talk revolved around gold and how no matter what took place in economics or geopolitics, gold was going much higher in the long term. Some of the speakers, however, were very negative on all the other commodities, including silver. Only one silver panel was held at the conference, composed of myself, Jason Hommel, and Keith Edwards, a technical analyst.
All of us agreed that not only has silver outperformed gold, but that this trend is likely to continue. Additionally, silver is as much a store of value as is gold, and Keith Edwards – the technician from a major banking institution – saw silver going to 20 - 22 USD on its next major move higher.
My thoughts have been, and continue to be, that you should own both physical gold and silver. Silver does move more quickly up and down, so be warned, but without silver your metals portfolio will not shine as brightly as it should.
Until next month,
Get real, buy real,
David Morgan
We highly encourage all of our readers to visit and become familiar with David Morgan's web site www.silver-investor.com, the world's leading source for serious investors. Add yourself to his free e-mail list. The first thing you will receive — for free — is the "Ten Rules of Silver Investing," written several years ago for The Global-Investor Book of Investing Rules: Invaluable Advice from 150 Master Investors, published in the United Kingdom. These rules are pithy, timeless, and will pay big dividends to new investors and seasoned professionals alike. You can opt out of the list at any time, but we doubt you will. Being on his list is a way to be certain you can closely follow the silver story and big economic picture.
Is Silver's Fortune Tied to the Dollar?
by Mark Burgess
Silver and gold are often lumped together in discussions about prevailing trends in the precious metals market. And though these metals often move together up and down the charts, subtle differences can be detected in the way they respond to certain pressures.
One of the most obvious factors affecting precious metals these days is uncertainty about the dollar's long-term strength. Both gold and silver are negatively correlated with the dollar. When the dollar performs well against other world currencies, spot prices for these metals typically decline. Conversely, when the dollar falls, demand for gold and silver usually rises, driving the price of these commodities higher. This past month, however, silver spot actually rose despite the dollar's late-month rally. On January 25, silver posted a single-session gain of nearly 2%.
A powerful force is clearly behind the global rise in demand for silver over the past year. Silver spot recorded a 45% net gain in 2006 while demand for both physical silver and shares of the metal through the Barclay's iShares exchange-traded fund have surpassed the projections of many analysts. As a result, some experts have confidently proclaimed a new bull market for silver. They point out that despite factors that would typically undermine the price of silver spot silver gained more than 12% in the last three weeks of January.
If silver is in fact experiencing a bull market right now, can it be wholly attributed to concern about the dollar's volatility over the past few months? And if this is true, are silver's gains sustainable, or will renewed consumer confidence in the U.S. prop up the dollar and send silver spiraling downward in the near future?
The answer may lie in the fact that, while silver has certainly benefited from the dollar bear market in recent months, the price of silver has also risen in currencies that are appreciating against the dollar. Many market experts have stated that this is a clear signal that the bull market for silver is likely to continue, driven by factors like increased pension fund investment, a surge in industrial demand, and silver's accessibility as a vehicle for smaller-scale personal investment.
While silver is definitely responsive to the relative power of the dollar, it clearly has the potential to shrug off swings in the dollar's value. When the American greenback posted a four-year high against the yen on January 30, silver spot dipped slightly, but ultimately held firm well above the $13 mark. Will a prolonged rise in the dollar hasten the end of the bull market for silver before it can pick up more steam? After its performance in January, many analysts have concluded that silver has room to run. If they're right, those without a position in silver could still realize significant returns by investing now. By the same token, those who currently own silver might do well to hold on to their metal or add more silver to their portfolio.
Mark Burgess has been an active trader of precious metals for over 30 years.
Precious Metals Worldwide
News & Trends from Around the Globe
80,000 Square-Foot Gold Showroom Opening Soon in India
The Dubai-based Joy Alukkas Group recently announced its plans to devote 80,000 square feet of new retail space, located in Chennai, India, to showcase gold jewelry products. The retail showroom, which is slated to open its doors in June 2007, will be the largest of its kind in the world. Many analysts view this development as further evidence of India's increasing influence in the global gold market.
New Computer Keyboard Features Silver Shield
Scientists have long known about silver's germ-fighting properties and have applied them in everything from detergents to textiles. Now this technology is being used to fight germs at your home or office workstation. Logitech, maker of computer control components, including keyboards, mice, and touchpads, now offers a cordless keyboard/mouse combo embedded with silver ions, known for their ability to suppress and prevent the spread of germs.
World's Largest Platinum Group Metal Producer Projects Lower Output in 2007
On January 30, Russian-based Norilsk Nickel announced lower estimated output for 2007, citing the need for construction and reorganization efforts at its main facilities. The company anticipated annual output for platinum at approximately 3 million ounces and output for palladium at near 710,000 ounces for the year, down slightly. Norilsk reported its platinum output for 2006 at 3.15 million ounces and palladium output at 752,000 ounces.