Gold and Silver Beaten Back with Stocks on Europe Fears

A fresh round of fear-based selling hit the markets today as liquidity issues in Europe continue to drive capital in waves towards the safest place of the moment.  Today more selling hit the gold and silver pits on the COMEX as investors continue to raise cash to meet other obligations.  Silver was hit with the ugly stick again as high margins and low open interest wreak havoc on the white metal’s market.

Silver closed COMEX trading at $27.23 per ounce or 5.2% on the last day of trading for the January 2012 contracts.  I wonder how many longs who were looking to stand for delivery got pushed out of the market today.  It will not do for JPMorgan (NYSE: JPM) to have to actually provide physical silver to the market when the market demands it.  Just ask the account holders at MFGlobal. Silver is now down nearly 50% from its April high of $49.84.

Gold was hit again for another $36.50 per ounce on Wednesday, taking the currency of smart people down to $1558.10 closing right on its 288 day moving average.  With the markets moving counter-intuitively to the backdrop of sovereign debt and municipal insolvency nothing would surprise me at this point.

With this latest round of liquidations, silver is now down for the year over 10% from a closing price in 2010 of $30.63 per ounce.  Gold has given back nearly all of it’s gains on the year up now just $140 or 10%.  There are two trading days left in 2011.

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Tom Luongo

About Tom Luongo

Tom Luongo is a professional chemist and self-taught economist who has been following and trading stocks for nearly 12 years. He has no formal ties to the financial industry and considers that an asset in his analysis of the interplay between monetary policy and capital markets.

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