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AGE Gold Commentary is our regular report analyzing trends in precious metals and rare coins. We monitor domestic and international markets and extrapolate from our 30 years in metals to place current events into a hard asset perspective. View archives.


4/14/2004: Gold, silver drop on March retails sales figures

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Greeting from American Gold Exchange. In this issue of Gold Market Commentary:

Gold and silver drop, dollar rallies on March retail sales figures
Excellent buying opportunity
Platinum and palladium slip
Classic U.S. coins remain steady
Recommended deals

Gold and silver drop, dollar rallies on March retail sales figures

Gold has dropped a little more than $20 in the last two trading sessions, closing today at just above $399 in New York trading. The direct cause of this pullback is the unexpectedly strong March U.S. retail sales figures, which rallied the dollar by suggesting a continued recovery in the U.S. economy.

On the potentially bullish side for gold, today the Consumer Price Index figures for March came out higher than expected, suggesting the real possibility of inflation. Gold, as you know, is a traditional hedge against inflation. While the March U.S. retail sales figures and the CPI figures suggest that the economy and inflation are both picking up, we’ll need a few more months of continued data to discern any real trends in either of these two economic sectors.

In our last update of April 1, gold was pushing the high end of its recent trading range and looked like it might break out to new highs not seen since the 1980s. Following the declines of the last two sessions we’ll have to wait a little longer for movement above $430, but we still think that move is coming. If support holds near $400, which it should, we expect gold to be range bound for the short term before climbing again. We continue to foresee gold trading in the $480+ range within the next 12 to 24 months.

Silver, too has fallen for two sessions, closing yesterday at $7.46 and today at $6.99. In our last update we warned that silver had the potential to fall hard because it had risen so quickly. While gold should hold support around $400 and consolidate back up into the $410 to $415 range soon, silver may erode further in price before it finds real support. In our estimation, silver should be priced somewhere between $6.50 and $7.00, its range before exploding over $8.00 an ounce.

Excellent buying opportunity

Although gold and silver action of the past two days is clearly disappointing, the basic fundamentals underlying their markets remain solidly in place, so we are not discouraged. Just have a little patience. We recommend that savvy buyers use the pullback in the gold price as another excellent buying opportunity. For silver, we recommend waiting for a few more trading sessions to see where the price settles. Regular readers of our alerts know we like to see an upward bounce in price, signaling an end of downward momentum, before we feel comfortable that the short-term weakness has passed.

Platinum and palladium slip

Although it continues to be surprisingly strong overall, platinum dipped by $2.00 in sympathy with the other metals today, closing at $928. Palladium closed today at $315, down $10 this session but up 57% since we made our buy recommendation at $200 on January 1.

Classic U.S. coins remain strong

As everyone knows, its tax time again. April is typically a slow time for coin dealers as Uncle Sam collects his annual dues. Despite the normal and anticipated seasonal slowdown in trading activity, classic U.S. gold coins remain in very short supply and demand continues to be strong. So, despite the pullback in metals, prices for investment-quality classic U.S. gold and silver coins are holding firm and remain a highly recommended investment.

View our inventory of investment-quality U.S. gold coins.

Recommended deals

We also have a small stash of 1878 Morgan Silver dollars, including the extremely popular Carson City issue. As the first year of issue of this extremely popular design, these coins are quite scarce but not very expensive overall.

View our inventory of U.S. silver coins.

Finally, we have a small number of the popular Type 2 $20 Liberty gold coins in slightly circulated Extra Fine condition. These classic U.S. $20 gold coins from the late 1860s and early 1870s contain almost one ounce of gold, but currently trade at only about 15% premium above the cost of modern 1-ounce American Gold Eagle bullion coins. Today’s trading price is extremely reasonable for a 130-year old gold coin. Because of their limited survival population, the classic U.S. gold coins offer a much higher profit potential than bullion. Get while they’re still here!

View our special offer of “Type 2” $20 Liberty gold coins (XF)

That’s it for now. We’ll keep you informed.

As always, thanks for your time!

Sincerely,

Dana Samuelson, Owner and President
Dr. Bill Musgrave, Vice President

  

Metal Ask      Change
Gold $1,476.94           $0.00
Silver $17.01           $0.00
Platinum $934.12           $0.00
Palladium $1,946.20           $0.00
In US Dollars