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What does 2008 hold for precious metals?

Platinum was the market champion of the three precious metals that most collectors watch. In 2007, its price rose by 33.89 percent from the final close in 2006.

Gold was no slouch. It came in close behind by registering a 31.44 percent gain.

Silver was the laggard, but few are unhappy with the result. It was still up 15.44 percent for the year, far more than the rise that could be obtained in the Dow Jones Industrial Average of 6.4 percent, or in the average price of a house, which declined by a similar figure.

Holders of the metals are feeling mighty good.

I took a look at the performance of the three metals since the close of the year 2000. These numbers then reverse themselves. Silver is the champion with a gain of 223 percent followed by gold at 207 percent and platinum at 150 percent. These numbers also aren’t shabby. Anyone who owned platinum probably isn’t complaining that silver should have been the investment choice.

Interestingly, gold is the most stable in its path. It went up all seven years, with gains of 2.46 percent in 2001, 24.72 percent in 2002, 19.59 percent in 2003, 5.24 percent in 2004, 18.29 percent in 2005, 22.84 percent in 2006 and 31.44 percent in 2007.

Silver and platinum seem a bit more bound to the business cycle. Both of these actually declined in 2001, which was a weak economic year. Silver was barely lower with a figure of negative 0.13 percent, while platinum was down 19.05 percent. Then both perked up and never looked back.

Silver’s pattern was up 4.85 percent in 2002, 24.00 percent in 2003, 14.35 percent in 2004, 29.57 percent in 2005, 45.33 percent in 2006 and 15.44 percent in 2007.

Platinum registered increases of 22.60 percent in 2002, 34.23 percent in 2003, 6.46 percent in 2004, 12.65 percent in 2005, 17.09 percent in 2006 and 33.89 percent in 2007.

Where will they go from here? Well, for today, look at the pattern and consider what you think will happen in 2008.

If you want to share, post it below or e-mail me at david.harper@fwpubs.com.

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2 Responses to What does 2008 hold for precious metals?

  1. Mark says:

    I believe we are heading into a new era which is really a return to the old era, where precious metals (which represent real wealth) will be the place to be. Wall Stree is bleeding and all it ever represented was paper profits. Why I don’t expect a crash with the likes of 1929, I don’t see historic gains of 9% in the stock market any longer. Factoring in the baby boomers who have already begun to cash in their IRA’s and 401(k)’s that will also keep pressure on stocks.

  2. Pat Heller says:

    I just did a similar analysis running from November 29, 2001 up to the end of 2007, coming out with similar results. I then went beyond this to admjust for the change in the U.S. Dollar Index over the same time. It turns out that gold, silver, and platinum all more than doubled while the Dow Jones Industrial Average and the NASDAQ did not even cover the decline in the value of the U.S. dollar. I expect gold and silver prices in 2008 to be at least as exciting an increase as we have seen in the past few years, but I don’t know that platinum will keep pace.

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