Top Stories This Week: Gold Makes Moves, Silver Squeeze Status Update

Two weeks into the second quarter of the year, gold seems to have started a turnaround from Q1.

Gold has seen momentum this week in particular — after a slow beginning, the yellow metal spiked on Thursday (April 15), nearly hitting US$1,770 per ounce.

The price increase for gold came as the US dollar fell and 10 year Treasury yields sank, reaching a low of 1.538 percent. The dollar and Treasuries were both impacted by the release of American retail sales and industrial production data for the month of March.

Retail sales were stronger than expected, while industrial production was weaker than expected — experts have suggested that together this information shows the economy remains uncertain.

“(The industrial production report) indicates the real economy remains uncertain, while the strong retail sales report was purely stimulus-based and transitory” — Tai Wong, BMO Capital Markets

What about silver? Like gold, the white metal declined in the first quarter of the year, although its downward trajectory was less pronounced — silver actually spiked into late January and early February as the “silver squeeze” narrative took hold.

To recap, the white metal initially came into the spotlight after reports that members of Reddit’s WallStreetBets forum wanted to work together to cause a silver squeeze. WallStreetBets users have since distanced themselves from silver, but that hasn’t reduced interest from retail investors.

According to Ed Steer of Ed Steer’s Gold and Silver Digest, the problem is that physical silver purchases from these investors are not affecting the large silver short position on the COMEX.

Ed doesn’t see any big moves for the silver price unless something changes in terms of the COMEX. For example, he said if large industrial consumers start having trouble getting 1,000 ounce good delivery bars, that would squeeze the wholesale market and would show up on the COMEX and in pricing. He thinks a break may be coming, but emphasized that it’s difficult to gauge timing.

“The signs are that this could be the year this is going to happen. Everything you see right now shows that things are on the very knife edge of breaking” — Ed Steer of Ed Steer’s Gold and Silver Digest

With silver in mind, we asked our Twitter followers where they think the metal’s price will be by the end of Q2. Although voters initially favored the US$30 to US$35 per ounce range, by the time the poll closed the winning answer was US$25 to US$30.

We’ll be asking another question on Twitter next week, so make sure to follow us @INN_Resource or follow me @Charlotte_McL to share your thoughts.

I want to end with a note on diamonds, a commodity we don’t get to cover very often. INN’s Georgia Williams looked this week at how the closure of Rio Tinto’s (ASX:RIO,LSE:RIO,NYSE:RIO) Argyle diamond mine in Australia could impact the market.

The mine produced 865 million carats of rough diamonds over its life of nearly four decades, and is expected to leave a gap in the industry, especially when it comes to pink and red gems.

“The effects of the closure of the Argyle mine will take some time. I estimate it will take at least a year, there is another tender next year” — Yaniv Marcus, Diamond Investment & Intelligence Center

Argyle was reportedly responsible for an impressive 90 percent of the world’s pink and red diamond production, so with the mine now offline, are these stones about to skyrocket in value?

Analysts think it could happen, but the price move may not come immediately — as Yaniv Marcus of Diamond Investment & Intelligence Center explained, Rio Tinto isn’t quite done bringing Argyle gems to market, meaning supply hasn’t fully dried up yet.

Want more YouTube content? Check out our YouTube playlist At Home With INN, which features interviews with experts in the resource space. If there’s someone you’d like to see us interview, please send an email to cmcleod@investingnews.com.

And don’t forget to follow us @INN_Resource for real-time updates! 

Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.