Gold and silver have put on quite a show this week, reaching highs of around $1440 for gold and $35.04 for silver.
The recent run was caused by what some are calling a perfect storm for metals to fly. There is a dropping dollar, bombs being dropped near oil fields in Libya, protests starting in Saudi Arabia, turmoil throughout the middle east, oil prices escalating to over $100 a barrel, and more and more chatter everyday about the dollar losing it’s reserve currency status.
Today, a peace treaty was proposed to the Arab League in Libya by Venezuela’s Hugo Chavez. Chavez has come out and offered to be the middle man between Gadhafi and the rebels in a plan for a solution. Just the mention of a peaceful alternative to the Libya uprising caused oil to taper back, and precious metals investors to take profits at the new highs. It has been reported that Gadhafi has accepted the plan proposed, but as we have mentioned before, any news out of this region must be second guessed at the moment. So far, the only alternative for the Libyan people is Gadhafi being ousted.
Unemployment claims were also down, possibly showing an improvement in the US job market. The non farm payroll numbers released tomorrow will have all eyes on them as well to see if it backs up the jobless claims being down. Hopefully, it is not just unemployments benefits running out for those that have not been employed for some time.
Greece and Portugal are in jeapordy of being downgraded once more, and regardless of the possible treaty in Libya, the rest of the middle east is still a ticking time bomb.
This poses well for metals prices, which held strong during the small correction and seem to be consolodating, preparing for the next leg up.
As of this writing, gold is at $1,418 and silver is sitting at $34.47 in overnight trading.
Let’s see what tomorrow brings…..