Overnight The Story Is Silver Not GoldWednesday April 20, 2016 08:27
(Kitco News) - Looking just at gold, a morning commentary would have a sound-bite consistent with the movie “Ground Hog Day.” The US$ is marginally weaker but equities are breaking higher. Generally a scenario for a muted move in gold, which is represented by a modestly higher open this morning. The big story is silver, which has broken through the 78:1 resistance level against gold, with big buying coming out of the Shanghai market. The recent better economic data out of China has focused investors on the general commodity space, which has been decimated with the prospect of slowing Chinese demand. It is premature to call a turn for China but should growth continue to accelerate, the base metal and industrial complex will outperform. Its possible that silver’s momentum may be enough to pull gold through the $1,250 level, especially if North American buying reignites. Silver has been ignored by North American investors but this can turn on a dime. I hope the US and Canadian Mints learned their lesson last summer. “If” physical supplies begin to tighten again, premiums for coins/bars will make last summer look like a bargain. Supplies are currently sufficient but if premiums begin to ratchet higher, it would indicate the move may have some serious legs.
By Peter Hug, Kitco Metals Global Trading Director; email@example.com