A dollar near its seven month low, and still precious metals – namely gold and silver – are wet rags.
The consternation of silver investors who went all-in whilst silver was 1000% since 2005 is tangible when the market sits at an all-time high and silver is the years’ worst performer.
The dollar index fell to its lowest level since mid-June, thus “setting the stage for a rally as traders position themselves for a stronger currency.”
Should the US dollar continue its uptrend, then further pressure would be put on silver and gold to, in particular, stay right where they are. Should the stock market see its March 2009 levels of 600, one can assume that gold and silver will see their 2009. But, will people at the retail level have access to precious metals?
The Dollar index dropped to 80.498 on June 19 before rising to the high of July. In the past 12 days of trading, it has been in a range of 81.239 to 82.3494.
During the first five months of the year, the Dollar rose 5.9 percent and has been on a roller-coaster ride as traders respond to mixed messages from the Federal Reserve on when it may begin to reduce its extraordinary stimulus. The US Federal Reserve has been buying $85 billion in bonds each month with the extra supply weighing on the greenback.
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The dollar has been the second-best performer this year with a 4.3% increase. It trails merely the euro’s 5.6% gain.
Despite dollar weakness, gold is up merely 1% for Thursday eastern trading. Silver, too, is up around 1%.
As we’ve written before:
The silver market has been battered by the psychological warfare of command-and-control economics. This economic warfare has been psychologically exhausting for the silver investor as silver remains a no-news market with short-term bearish price movements. Over the last year, however, the silver investor has become hardened or acclimated to a market without new buyers or new sellers and little legitimate price action. Instead, they’ve watched as banks colloquially known as “commercial hedgers” bluff a long, long position in physical silver with shorts exceeding three-times the yearly supply at any given time. What’s likely is these banks do not own any a position of physical silver anywhere near this amount.
For the 49er (those who bought silver in the 40s), who entered into the market in March-April of 2011, the price of silver has been a source of discomfort if not inner-turmoil. Retail bullion shops across the country started to provide services outside their previous jurisdiction of bullion slinging, working for several weeks after the May Drive-By Shooting as therapists and counselors. That price action in the Spring of 2011 was such to entice a whole new breed of silver investors – the 49er – into the market, only to subsequently discourage them and break their confidence that, perhaps this once, they made the correct investment decision.
The dictated price of silver since that point last April has been managed in a way to break the spirit of the silver investor of the last $20 (from $30-$50). The price propaganda not only keeps the price of silver low, but also puts psychological restraints on buying demand via jerky moves to the up-and-down side in an overall sideways market. The rulers say to our dear friend the 49er:
“Nope, we are sorry Millenial men and women who rushed to your neighborhood coin shop looking to make the investment of a lifetime. We’re going to gut this market of 25% of its value once that check of yours is cashed, and you’ll be lucky if your husband or wife doesn’t leave you for losing all the money, you fool! After all, what a nice kitchen those couple thousand dollars lost on 1,000 ounces of silver would have built.”
And since that period of sorrow for the 49er, the price action has been blah. Sure, in September the price ran up to just below $40, instilling further false hope that now the run was to begin again. The market was once again obliterated back down to $26, essentially where it began the year – a near 50% loss for our dear friend the 49er.
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