Week ending 1st March 2013

Strong Equities continue to bring downward pressure on Gold & Silver.

A volatile week although ending pretty much as it started.

Gold progressed positively on Monday and Tuesday on the back of surprises and concerns about the Italian election and generally being oversold the previous week. From US$1,554 low the previous Thursday to US$1,604 on Tuesday evening representing an increase of 3.2% in a few days.

The positive move was short lived with Gold falling back to US$1,582 and Silver at US$28.01 by the end of the week. The big hit occurred on Wednesday (USA time) when the Dow progressed by 176 points to be now close to a 5 year high.

There appears to be an interesting balance, the positive momentum of equities is channelling precious metals investments into paper stocks while reports are that Gold is oversold with a large number of hedge funds short on technicals.

On the negative, Goldman Sachs reported a view that the average Gold price for 2013 will be US$1,600. Their previous estimate was US$1,810. A knee-jerk reaction or will this be the first time since 2001 that Gold will record a lower average price on a year-over-year basis???

We do know from the last week that the Central Banks were quite, Asian markets were focused on equities, while reports from the Jewellery industry is that demand is steady.

This coming week news is expected to be relatively quiet, although watch out for indicators that relate to Italy's political and economic scenarios.

Summary:

Gold ended February down US$18 per ounce being the fifth month in a row that Gold declined, importantly the longest losing streak for 16 years.

Momentum in equities is siphoning investment away from Gold and Silver.

Hedge funds may be oversold.

Silver has been more volatile than Gold of recent weeks, at these lows there may be opportunities to buy in coming weeks.

The fundamentals have not changed and are positive towards Gold and Silver

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