Precious metals continued to free fall on the final day of trading this week with silver down a massive 18 percent and gold having its worst day since June 2006. Gold has shed over 10 percent of its value in the last two days of trading and many are speculating that its seemingly endless bull run has come to a close.
The dollar was regaining strength on Thursday as declarations that it could be replacing gold as the new safe haven in light of the declining European currencies began to surface. Panic at the notion of the end of gold’s reign and an attempt to meet margins alongside plummeting equities yesterday started the selloff. The Federal Reserve’s decision to help ease the global slowdown by exchanging debt maturities also contributed to gold reaching its lowest price since in nearly two months by increasing the attraction of for Treasurys and cash.
Gold was only one of the many metals being sold off in recent trading. Copper recently reached a 52-week low as fears that the global economy would continue to falter and reduce the need for copper in commercial projects.
Silver, valued both as a precious metal and for its industrial uses, lost on both accounts. The correction within metals, as investors attempted to account for sagging equities took a hard hit on silver. This was compounded by reports from China indicating slower growth and less manufacturing or declining demand for silver in commercial projects. Silver is employed in everything from consumer electronics to solar panels and glass, when the economy is weak, sales in all of these categories fall. The threat of weakened need for silver caused the metal to suffer its steepest losses in over 30 years. Silver prices sunk 27 percent from last week, reaching a bottom last seen in February.
Naturally, it wasn’t only the investors with money in the commodities that took a hard hit this week. The metal selloff infiltrated the mining world as well pushing top miners like GoldCorp. (GG) and Yamana Gold Inc. (AUY) near 52-week lows. Barrick Gold (ABX) suffered similarly for the day. For the most part major miners specializing in gold shed evenly across the board with most falling between 5 and 6 percent for the day.
Miners specializing in silver, for instance Silver Wheaton Corp (SLW), endured more dramatic losses, mirroring the metal itself.
Meanwhile gold exchange traded funds, backed by the physical metal have exhibited a less dramatic outpouring. According to the Wall Street Journal, SPDR Gold Trust (GLD), the world’s largest ETF, saw its holding reach 1,252.2 metric tons for the week from last week’s closing number of 1,251.90. The fact that some investors were still buying during the declines indicate feelings on the metal may still be mixed.
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