The first few days of April played an elongated April Fools joke on precious metals investors as both silver and gold took heavy losses. Our attention was fixated on various parts of Asia, but mainly on escalating tensions on the Korean peninsula. Finally, unemployment rates in the US went up for the first time in a while at the same time the US dollar and stock markets continue to surge forward.
The early part of the week saw gold and silver take massive losses for two consecutive days over Tuesday and Wednesday. The weird thing about these massive losses is that there is no real key market factor that triggered them.
While there is still plenty of disheartening economic news to report out of Europe, none of the news released this week did much in the way of affecting precious metals. The only silver lining that could be taken from these losses is that it opened up the market to hoards of bargain hunters.
It seems like Korea makes threats all the time, and usually no one pays them any attention but things seem to be getting a bit more serious. North Korea continues to make very serious threats about using nuclear arms against both the United States and their neighbors to the South. No one wants war but it seems like North Korea is strongly pushing the issue, even more so than they have in the past.
The reason we are talking about the possible outbreak of war is because war, especially between prominent nations such as the US and South Korea, is because it usually pushes precious metals. Not like war is a good thing, but it usually means for an increase in the value of both gold and silver.
As we look ahead to next week our attention will be focused on both North Korea and the US economy. Recently, the US stock markets and dollar have been increasing in value and then holding their positions which has been 100% detrimental to precious metals. Americans are happy that their country is finally beginning to see some positive news from their economy but it is really frustrating to investors, and has been for a few weeks.
And for all the reasons mentioned above, it is no wonder why we will be keeping a close eye on the situation in Korea.
Gold, which started the week just a dollar shy of $1,600, finished down roughly 20 dollars. This number would have been a lot worse if it hadn’t picked up about $30 on Friday. Silver started the week at $28.38 and finishes a little over a dollar down at $27.32 on Friday. Much like gold, silver had a good day on Friday which really helped its weekly numbers look better.