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Market Comments from Jerry Williams – December 31, 2014

It’s time for the year end commentary with gold at $1,185 and silver at $15.75. This is when the naysayers come forward and say, “See, gold went nowhere, right where it started the year.” In reality, there were some significant swings during the year. It went up to $1,370 in April when it met massive futures selling, driving the price as low as $1,150 by October. That was pretty discouraging to long term holders, but particularly to potential buyers. Sentiment remains mostly negative, an outlook that will probably not reverse until we pass the $1,370 level again.

Globally, every other country is trading gold at higher prices in their own currency, a phenomenon I have never seen in 40 years in the business.

A 73:1 ratio of gold to silver is also a rarity. With silver prices as low as they’ve been in four years and approaching the mining production cost level, silver was perceived to be cheap by investors. This resulted in an increase in demand for silver bullion products and caused a shortage in the last quarter of 2014.

Given the speed at which news travels and markets react, with computer trades and extreme leverage, the next upward move will surprise everyone and these current prices will be a distant memory (ex. 1978, 2000, 2007, 2011).

The time to act is now. To quote Richard Russell, “If you’re not sweating, you’re investing properly”.

Wishing everyone a happy and prosperous New Year!

Jerry Williams