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May 2014 Metals Market Update - Home On The Range

|Includes: SPDR Gold Trust ETF (GLD), SLV

Metals have been held range bound in recent weeks and look to remain that way in the near term. The top for gold has been at $1310/oz while support has come in strong at $1280/oz. Silver has a wider swing pattern with $20.00/oz at the top and $19.00/oz at the bottom. This past week neither metals has moved more than 1% in one direction or the other. Like always scroll down and you will find this month's discounted specials.

Here are the moving averages for the metals with a snapshot of current spot prices.




50 day



100 day



200 day



Today's New York spot prices:
Gold: $1,294.00 (-$3.50/1.21%)
Silver: $19.38 (-$0.17/0.67%)

Nevertheless, there are a few developing stories which could greatly impact the precious metal complex. Two of them in particular are the focus of this month's market update.

The first is the ongoing drama in Russia. Tensions between Ukraine and Russia captivate most of mainstream media and have temporarily driven prices upward. Behind the scenes however something much more important is going on. Russia has been hinting at the possibility of settling large gas/oil transactions outside of the dollar. Additionally, top ministers of finance have called for decreasing exposure to US debt. Altogether, this represents a significant step away from the dollar (or the euro for that matter) as a world reserve currency.

Of course this comes on the heels of the US Sanctions imposed upon Russia after the conflict in Crimea. As Ron Paul and so many other libertarians have been saying for years, financial sanctions are absolutely of no help to anyone and often needlessly hurt others. For Russia, the results have been painful thus far. The ruble has fallen dramatically since the beginning of the conflict and subsequent sanctions.

The implications of this story are far reaching. Effectively it means one less economy (more likely several) will be reducing net dependency on the dollar. The dollar is already in its death throes. This is one more (potentially very large) step towards its eventual demise. Whether Russia is actually able to start settling its international obligations outside of dollars will depend on its trading partners. China and Iran are among the bigger names that are dropped. If they succeed, this will be a major affront to the dollar and will potentially polarize eastern and western relations. As of today, top officials say they are 98% there. Needless to say this is something we will be closely monitoring.

Wouldn't we all be better off if we could just go back to using honest money (gold and silver) again?

The second story we are watching is the end of the London fixing price for Silver. It is scheduled to end this August. During the meantime the 3 major banks that currently sit on the committee will be discussing alternatives. This announcement is another in a series of precarious stories coming out of London. There was Duetshe Bank's resigning its seat on the London Gold Fix back in April. For many of the you the LIBOR scandal in 2012 is still fresh in your minds as well. Needless to say theories abound in the gold and silver community as to the validity of such a price fixing system. Given the nature of the LIBOR and other news most of them turn towards the negative. Peter himself addressed this fact in the most recent addition of our Gold Letter which you can check out here. As to the effect that this will have on prices, it is hard to say. From its formation in 1897 benchmark pricing by the banks aided the market by providing much needed liquidity and clearing. Back then, this price information was helpful particularly for miners and banks who wanted to economize their production or account for current assets and liabilities. The fix was a market making transaction. Today however with our highly advanced and ever evolving fin-tech industry markets no longer look to the fixing as much. They are market making transactions throughout the day on several electronic exchanges. The idea of a couple of guys on the telephone setting a price seems more than a bit outdated. Interestingly enough in the gold bullion industry most government mints will still base their market making deals off of the London fix pricing. The industry has until august to come up with an alternative. We will have to wait and see what the impact of the alternative, if any, will be.