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How Did Gold and Silver Perform in 2011?

Commodities / Gold and Silver 2011 Jan 01, 2012 - 05:39 AM GMT

By: Eric_McWhinnie

Commodities

On Friday, gold (NYSEARCA:GLD) prices managed to climb $25.90 higher, breaking its six-day losing streak. Although gold has been in a slump during the final months of the year, gold continued its 11-year winning streak. Gold prices finished 2011 at $1,566.80, representing a 9.3 percent annual increase.


As the chart below shows, gold prices bottomed in February and experienced another record-breaking year. In September, gold prices reached a new all-time nominal high above $1,900 per ounce. In the following months, gold declined as liquidity concerns dominated the market. The fundamentals still remain in tact, and gold is currently finding support near its 300-day moving average. “Given the ongoing debt problems facing many economies and record low interest rates, we still expect the bull-run in gold to continue with the metal to rebound across 2012,” said James Moore, an analyst at TheBullionDesk.com.


Silver (NYSEARCA:SLV) prices also climbed higher on Friday to end the final trading day of 2011 on a positive note. However, silver prices finished 2011 at $27.92, representing a 10.7 percent annual decrease. The silver market is a lighter volume market than gold, and is more susceptible to wild price swings. Furthermore, silver has an industrial component that was hindered by global slowdown fears. The MF Global bankruptcy also shattered confidence and many traders faced margin calls or lost access to their gold and silver positions, dampening interest in silver contracts.

As the chart above shows, silver prices peaked near $50 in late April. In the following months, it was a bumpy ride as markets were driven more by euro zone headlines than fundamentals. Silver experienced a sharp sell-off in September, but found support near $26 per ounce. Silver found support again near $26 in December. Although silver underperformed gold in 2011, the fundamental reasons to hold silver remain in tact as well. Legendary commodities investor Jim Rogers believes governments will continue to print more money when the economy fails to improve. “When things don’t get better they are going to print a lot of money, Rogers explained. “When they print money, you have to own silver, you have to own rice and you have to own real things.” If Rogers had to buy just one precious metal, he would go with silver “because silver is more depressed.”

For more analysis on our support levels and ranges for gold and silver, consider a free 14-day trial to our acclaimed Gold & Silver Investment Newsletter.

By Eric_McWhinnie

http://wallstcheatsheet.com

Wall St. Cheat Sheet : Only days after the S&P 500 crashed to the depths of hell at 666, the Hoffman brothers launched Wall St. Cheat Sheet: one of the fastest growing financial media sites on the web. Like a samurai, our mission is to cut through the bull and bear shit with extraordinary insights, a fresh voice, and razor-sharp wit. We provide the highest quality education and information for active investors, financial professionals, and entrepreneurs.

© 2011 Copyright Eric McWhinnie - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors


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