For the first time in five months, both gold and silver prices
broke above their 200-day moving averages, a key technical level
that often flags a trend change.
The precious metals rallied to four-month highs as China
reported manufacturing shrank for a 10th straight month, spurring
calls for more stimulus.
Fed minutes released Wednesday suggested more quantitative
easing will be needed if the economy fails to improve soon,
sparking a sell-off in the U.S. dollar.
"As long as politicians continue to ignore the real
implications of the uncertainty they are creating, gold and
silver should continue to set new nominal highs," John Browne, a
senior economic consultant to Euro Pacific Capital, wrote in a
SPDR Gold Shares (
) rose 0.84% to 161.88 Thursday.IShares Silver Trust (
) jumped 2.32% to 29.59. In the futures market, gold added 1% to
$1,670 an ounce. Silver increased 2.38% to $30.64 an ounce.
PowerShares DB U.S. Dollar Index Bullish (
), tracking the greenback against a basket of foreign currencies,
fell 0.17% to a three-month low.
GLD returned 5.63% year to date through Wednesday while losing
13.03% in the past 12 months.
Morningstar's Commodity Index gained 10.76% and 0.38% over the
Scott Thompson of Thompson Wealth Advisors in Statesville,
N.C., with $37 million under management, reopened a position in
GLD this month after selling it in May.
"According to American Century Investments, gold historically
rises on average 36.7% when inflation is high and rising," he
said. "Almost everything we buy on a day-to-day basis is going
Jonathan Citrin, founder and CEO of CitrinGroup in Birmingham,
Mich., with $55 million in assets under management, has put 6% of
assets in his Global Growth portfolio into gold. He diversifies
the portfolio across stocks, commodities and cash.
"Both gold and silver have low to negative correlations with
many domestic and international equities," Citrin said. "Looking
beyond what Bernanke and gang may decide at the end of the month,
both play an important role in reducing volatility."Market
Vectors Gold Miners ETF (
), a basket 30 companies, lagged the market and bullion over the
past year, but overtook them recently. In the past three months
it added 11.66% vs. 7.89% for the MSCI World Index and 5.56% for
GDX lost 7.64% year to date and a steep 25.22% in the past 12
months. The MSCI World Index climbed 10.68% year to date and
16.54% the past year.
Unlike bullion and silver miners, it's still trading below its
200-day average, which is bearish.
SLV climbed 7.35% year to date, while losing 32.16% in the
past 12 months. The ETF has jumped 16.78% off of its 52-week low
of 25.34 from nearly two months ago.
Global X Silver Miners ETF (
), with 35 producers, rose 0.68% to 21.05 Thursday. Its chart
follows SLV, but is far more volatile. It's down 0.97% year to
date and 23.97% in the past 12 months. It outpaced the market and
SLV the past three months by a wide swath, vaulting 18.40% vs.
7.89% for the benchmark and 5.78% for the metal.