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Gold just violated a key support level... but don't go running for the exits just yet.
This morning, the price of gold fell as low as $1,080, its lowest level in five and a half years.
This is not good for gold in the short term. Before today, gold had been holding steady in the $1,140-$1,150 range. Breaching that level will likely bring on more selling. We want to see gold recover back to the $1,140 range to restore health to the market.
On Friday, Louis James alerted Casey Investment Alert subscribers to gold’s breakdown. He noted that gold isn’t the only metal getting clobbered…
Note that copper, nickel, aluminum, zinc, and lead… the whole list of important metals is down today, not just gold. This belies the rosy picture of economic recovery driving the markets. And that makes a sharp reversal a distinct possibility.
Louis went on to explain that the price of gold might be volatile in the short term. But he’s buying on weakness for the longer term…
For these reasons, I see the current meltdown as a buying opportunity.
I understand that this won’t appeal to those who feel like they’ve been trying to catch falling knives for years. But unless more than 2,000 years of monetary history are about to be upended, that’s the only way to look at it.
• And another precious metal is at its lowest price since 2009…
On Friday, the platinum price dropped below $1,000/ounce for the first time in six years.
Platinum is part of the platinum group metals (PGMs). The PGMs are six metallic elements clustered together on the periodic table: ruthenium, rhodium, palladium, osmium, iridium, and platinum.
Louis, who also edits International Speculator, explains how platinum is different from gold and silver:
The most important thing for speculators to remember about platinum group metals (PGMs) is that while they are precious in the sense of being rare and expensive, they are actually industrial metals. They do not have the monetary history of gold and silver. They do not respond to “safe haven” demand the way gold and silver do.
As commodities, PGM prices are driven mostly by demand from automakers. They use them in catalytic converters that clean up car exhaust fumes. Palladium can substitute for platinum in this use in gas-burning engines. For diesel engines, platinum is still the best catalyst.
Louis went on to explain that Europe is platinum’s key market…
So, where do most people drive diesel cars? Europe. What’s been happening in Europe over the last few years? Economic stagnation, fear of Russian aggression, actual war in Ukraine (which is part of Europe), and near political disintegration of the EU. The latter may still happen, if Greece does not live up to its new obligations. So it’s no surprise that demand for platinum is down. Platinum now sells for less than gold.
An ounce of platinum currently costs $1,009, while an ounce of gold costs $1,115.
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