Silver lining

I checked precious metals prices this morning.

Gold was $1,070.80 on the Kitco website.

Silver was at $14.03.

Markets fluctuate day to day and the swings are generally just background noise.

Even in an up market, there are swings lower. In a down market there are many jumps higher.

The important thing is to be aware of the trend.

Another distraction away from focusing on trends is when a price gets near a round number.

With this in mind, it is no wonder that the price of silver stands out.

Immediately I began to think whether the metal would fall below $14 or whether like a football goal line stand, the round number would hold.

It really does no good to think this way.

Silver has been declining all year.

On the last trading day of 2014 it closed at $15.68.

The high for the year was $18.31. The low so far was $13.65.

So never mind the nice round number of $14. The important one is the low of $13.65.

Will it hold? Down trends do end eventually.

Even if silver is not ready to begin an up trend, we are likely to see something of a move higher in January as seasonal buyers jump into the market to get new bullion coins with the 2016 date on them.

How powerful this influx will be we will have to see, but there is no doubt that there will be an influx.

If the Mint can't keep up with demand for silver American Eagles, it will be interpreted as a sign of silver strength even if it is just a seasonal blip.

The Mint rations supply.

Fluctuating demand falls on the rest of the supply chain through fluctuations in the premium paid by buyers over melt value. The higher the premium, the higher the level of unmet demand.

But before the fun and games of 2016 begin, current owners of silver will be assessing their positions.

Some might choose to sell some or all of it to generate a tax loss that can be applied to gains in some other assets that can also be sold.

This also is background noise.

It will disappear when we turn the page on the calendar.

With New Year’s, comes a good time to remind ourselves of first principles.

Silver and gold should be no more than 10 percent of investable assets. Precious metals should be viewed as insurance against calamity. Persons who view it this way will be looking to top up their holdings in 2016 because of the relative decline in value of what they own now against their other investment holdings.

By sticking to principles, it frees the mind to think about other things, like what will the price of a first strike, MS-70 2016 silver American Eagle be?

I know, I know. That’s a collector question.

It is also what I would rather spend my time on.

Buzz blogger Dave Harper has twice won the Numismatic Literary Guild Award for Best Blog and is editor of the weekly newspaper "Numismatic News."

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