Market Report: Turning the Corner

by Alasdair MacLeod
Gold Money

The long-awaited event of the week was the Fed raising the Fed funds rate by ¼%. Everyone knew it was coming, and what it would be.

[…] The market effect was a strong dollar ahead of the event, and weak precious metals. There was profit-taking in the dollar afterwards, so precious metals bounced. Entirely predictable.

Gold rose $23 on the week to $1227 by early European trade this morning (Friday), and silver by 27 cents to $17.30. Silver was relatively weak yesterday in US trade, compared with gold, tracking the profit-taking in copper, while gold continued to firm up against a weakening dollar.

Silver is getting left behind as our introductory chart shows, with it up only 8.7% this year so far, while gold is up 6.5%. Normally, silver moves on average slightly less than twice that of gold, suggesting the right price for silver should be about $17.80. Silver’s slight loss in performance is shown in the gold/silver ratio, which is our next chart.

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