This week saw gold and silver start off fairly strong but quickly revert back to old ways as both gold and silver have done anything but impress lately. The ongoing banking situation in Cyprus finally came to a conclusion as banks opened again towards the end of the week. US traders and investors cannot seem to catch a break as far as precious metals go because as long as the economy is looking up, there is no room for gold to make a solid, sustained comeback.
Cyprus, Cyprus, Cyprus
Only a few weeks ago many people hadn’t even heard of Cyprus, or if they had, they really didn’t pay the tiny island nation any mind. Now that their banking situation is at the forefront of everyone’s minds it is hard to ignore all that is happening.
Finally a bailout plan has been reached in Cyprus which leaves the more modest citizens content but has really irritated those who have over 100,000 euros in the bank. Those who do have larger sums of money in Cypriot bank accounts will be subject to taxation in order to help fund a bailout that the bank desperately needs. In the wake of this story some speculated that perhaps Cyprus would abandon the Euro, but this was only speculation.
US Economy Sustaining Strength
Many US investors are wondering why, if people are losing faith in the euro, gold and silver are not picking up strength. The answer to this question can partially be found in the fact that instead of precious metals gaining immense value, the US dollar has. The USD, over the past few weeks, has hit highs that see the dollar more valuable now than it was almost a year ago.
This, combined with the fact that the US economy is still continuing to output strong data, is partially to blame for gold and silver’s relative stagnation.
Everyone will be looking at Cyprus and the rest of Europe as by now you are likely well aware that they are not the only nation needing a bailout. There are plenty of other countries in desperate situations all throughout Europe and the world and they need help, some would argue, even more immediately than Cyprus did.
I know we say this every week, but our eyes will still be fixated on the US as this improbable run of form has continued for yet another week.
Gold started the week at $1,610 and ended at $1,597, posting a loss of almost $13 on the week. Silver, on the other hand, started the week with a spot value of $28.76 and ended the week at about $28.37, a loss of almost 40 cents.