Gold, Silver Take Hit On Profit-Taking

Gold and silver are near three-month highs but recent gains in both metals’ spot values may have represented too much profit for institutional investors to leave on the table. After a trading session in which gold rose more than $20 per ounce and silver exerted its influence in the above-$21 per ounce range, Tuesday saw the gold spot price fall some $13.40 to $1337.90 while silver fell $0.25 to $21.19 per ounce.

“This appears to be a classic case of profit-taking,” said analyst Paul Ford. “Central banks haven’t made any adjustments and the situation in the Ukraine is still very precarious. It looks like household investors are still supporting the market but institutional investors use gold and silver for profit, not safety like most of us.”

Gold is still down 15% from a year ago but has gained more than 7% in the last month. Gold started the year 26% below January 2013 levels, but uncertainty over the Federal Reserve’s plans for interest rates and the consistently negative economic data have motivated many mom-and-pop investors to trade paper investments – like stocks, bonds and cash accounts – for gold. “Physical gold and silver don’t pay interest or dividends but many Americans are more worried about the long-term stability of the U.S. dollar than with turning a quick profit.”

Ford says that even though gold has been on a mostly meteoric rise since 2001 many investors are fairly brand new to gold. “We invite those investors to call us for answers or simply download the free gold and silver investing guides that are at the bottom of every page on our web site.

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