Have precious metals bottomed?
Monday, August 19, 2013 at 02:23AM
Silver Prices
FRIDAY, AUGUST 16, 2013
by David Franklin, dfranklin@sprott.com

After a gut wrenching correction that drove gold and silver prices down 38% and 63% respectively from their 2011 highs, the recent price action in precious metals has been dramatic. From the low on June 28th, gold bullion has appreciated by more than 11%, but the real fireworks have been seen in gold mining equities with the NYSE Arca Gold Bugs Index up close to 20% and the junior miners, as measured by the Market Vectors Junior Gold Miner ETF, up a stunning 33%! Silver has joined the party, increasing by 17% over the same time period and silver stocks as measured by the MSCI Silver Index are up 28% to August 16. This price action confirms that the sentiment for precious metals and miners has changed dramatically, and it couldn’t have happened soon enough.

The bottoming process in precious metals investments has been an extended and frustrating affair. Investor sentiment appeared to be hitting rock bottom at the end of June after the metals and miners were pummeled with a series of negative developments. Federal Reserve Board Chairman Ben Bernanke started the downward plunge in gold at his post-FOMC press conference on June 19 when he suggested the Fed would begin to moderate the monthly pace of bond purchases.

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