Precious Metals

Gold was flat until Hong Kong closed on Thursday, then it pushed higher, peaking at $925 during the first hour of the New York session, but that was it as it fell back into a $910-$915 trading range and stayed there through the Globex, finishing an uninspiring day at $910.00/oz., down $1.00. Overnight, gold is pushing higher.

Platinum soared as high as $1165 in early New York trading but then it too fell off, eventually getting stuck between $1140 and $1150, and ending at $1145, up $10. Overnight, platinum is little changed.

Silver prolonged its string of positive days and, although it too peaked around 9 a.m., after pushing past $14 to $14.13, it rebounded from a fall to $13.70 to take back a chunk of the lost ground and close at $13.79/oz., up 6 cents. Overnight, silver is trending higher. (Click here for charts)

While yesterday was pretty much about consolidation until the market can digest the bank stress test reports, silver and platinum still managed to post positive numbers even as gold got a serious case of the blahs.

Precious metals fanciers had cause to be a little disappointed, as equities fell off, oil gushed higher and the dollar weakened. But that was apparently insufficient to overcome investor indifference.

With gold a bit in the doldrums, this is a good time to consider some larger issues. Yesterday, longtime gold watcher Julian Phillips, writing for Goldforecaster.com, pondered the implications of the recent revelation that China has been quietly bulking up on gold.

Wrote Phillips: “The fact that China is a buyer for reserves is far more important than how much it currently holds. There is no other conclusion we can reach other than China recognizes its worth as a reserve asset! .

“On the bigger global screen, this revelation stops the concept of gold as a ‘barbarous relic’ as bankers had hoped it would become in the last 50 years and brings it back into a monetary role, even if it is minor at this point … If China buys a larger percentage of local production going forward, then it is probable that central bank buying will overtake central bank selling in the years to come. This alone takes gold away from the perception of its being an archaic relic. More than that it brings gold back to a particularly valued asset ‘in extremis’, the times we are now living in.

“This has to force a rethink of the role of gold by unwilling bankers and the recognition that selling it will not elevate the value of paper money any more. The confidence lost in the last two years cannot be shored up by such foolish practices. It is now time to recognize the dangers not only of today’s crises, but of the dangers that lie ahead, even if the world economy returns to the halcyon days of early 2007 [which appears to be the aim of central bankers and governments now]. The dangers that led to the ‘credit crunch’ will return, if successful. So prudence demands recognition of gold’s value when life gets painful.”

Obviously, we concur.