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Tuesday, January 22nd, 2019 - Buy Gold - Bringing you trusted gold news and gold investing information since 2006

Is There a Direction for Precious Metals?

The year 2011 hasn’t started all that well for precious metals. Bearing the 3rd straight weekly loss in a row, Spot Gold closed the week at $1,343 per ounce. Silver is off almost 12% since it reached a 30-year high during the first week of this year. Taking nothing away from an incredible bull-run during the past decade, investors should keep in mind that precious metals are in essence commodities, even though gold and silver are often considered investment assets.

As such, an investment in gold or silver provides no inherent yield other than price appreciation. The commodity aspect comes to light now and then when prices are on the run. From the perspective of the average investor therefore, an investment in precious metals is not to be taken lightly, particularly the slightly dubious sounding gold investments touted on TV ads.

In terms of assessing prices, it helps to remember that a fair amount of the recent precious metals price increase was driven by the loss of value (both perceived and actual) in the US Dollar. When you value Gold in other currencies, its price strength is somewhat muted, particularly against high yielding currencies such as the Australian Dollar. From the perspective of the Australian Dollar, Gold had already peaked in early 2009 and has since been in a sideways pattern. If you believe the technicians, we should soon find out where Gold versus Aussie Dollar is leading to as a break-out from this triangle pattern should emerge in the coming months.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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