Silver won’t follow gold bullion lower

(Image courtesy www.usagold.com)

If you ever wanted to buy gold coins, this may be the moment. The spot price of the metal has dipped below the $1,300 per ounce resistance level. All but the scarce to rare gold coins are selling just above melt value, or they simply aren’t selling.

Here’s the problem: Many of the smaller coin dealers offering such coins don’t have sufficient merchandise turnover to avoid losing money at today’s prices. Much of their inventory was purchased anticipating gold remaining in the $1,300 to $1,350 price range. Some are artificially supporting higher prices, although this is slowing what were already anemic sales to just about the point where nothing is selling.

Gold’s decline took it below its 200-day moving average as well as the psychologically important $1,300 level on May 15. Those who follow price charts attach great importance to the 200-day average. The expectation is when the price falls below it, the recent uptrend might be ending.

What has caused gold’s weakness? Nobody knows for sure, but the usual culprits are cited, the rising exchange rate of the U.S. dollar on the world market being the main one.

Ironically, silver and platinum have remained steady as gold dropped, bolstering values of non-gold collectible yet less than rare coins.

Right now, if you had to bet on which direction this volatile market will head next, which side would you take?

More importantly, will non-gold coin values reach a new support level, or will dealers continue to discount many of their asking prices from what appears in published price guides such as this one? Time will tell.