Lots of numbers affect the price of precious metals. I have been following how current events, economic data and even cultural beliefs affect the prices of gold and silver for about 30 years. This information hasn’t been written down in a diary or log – I find that if I write something down I tend to forget it. If you don’t believe me, try to remember a friend’s phone number off of the top of your head. No one remembers anyone’s phone number anymore – you just store it in your smart phone. If you ever need it, it’s there. Leave your phone at home and need to contact someone, and you will have to look it up on the internet – it isn’t stored in your internal memory. By making mental notes, I am able to be an active watcher and observer, and to make changes to my perception of a rule when the markets make exceptions.
Last Friday, Good Friday, was a holiday, and the markets were closed, but the 2015 April Job Report was posted. Any news that came out on Friday would not affect the markets until the following Monday. And the news that came out was BIG. The report on new jobs fell more than a little short of expectations. It missed by HALF! That’s worse than guessing. Fewer jobs means there is a perception of a weaker economy, which pushes money into the “safe haven” commodities like gold and silver, and away from government debt, like bonds. It is always important to remember that perception is reality. That’s why magicians have audiences. I figured that the precious metals markets would see a big jump on Monday, and they did – about 2%. I made a friendly wager with a colleague that silver would be up at least 40¢ over Friday’s close sometime during the day. At 10:30 AM, it was actually up 45¢. The result was a little more cash for me to buy silver (when it goes back down). I am not a market forecaster, just an observer. I don’t have the money available to make a living playing the markets, or have a stomach made of iron to do it with other people’s money.
So, when anything happens in the news; economic data is released; it is near the end of a financial quarter and margin calls are due; or the Chinese New Year is around the corner, make a mental note of anything that happens in the markets, along with how long the news affects the prices of precious metals or commodities. You may have a few people believing your name is Kreskin.
P.S. Well, precious metals were lower on Tuesday, so I could spend my hard-earned $5! Why did it go down instead of continuing up? Usually huge rallies drop back due to profit taking by the big money. 45¢ per ounce doesn’t sound like much, but multiply it by 100,000 ounces and you’re looking at a $45,000 profit. Not bad for a day’s work. And if you have the credentials and clearance, you can do that without investing any of your money at all.