Gold Nears $1,800 as Silver Crushes Every Asset Class YTD

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On Tuesday, gold (NYSEARCA:GLD) futures for April delivery increased $13.50 to settle at $1,788.40 per ounce, while silver (NYSEARCA:SLV) futures surged $1.62 to close at $37.14.

Precious metals (NYSEARCA:DBP) climbed higher as new orders for manufactured goods dropped the most in three years last month.  According to a Commerce Department report, durable goods orders fell 4 percent in January, the biggest drop since January 2009.  Economists were only expecting a 1 percent drop.

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Durable goods range from household appliances to big-ticket items like aircraft that are meant to last three years or more. Excluding transportation, orders fell 3.2 percent last month when economists had expected the reading to be flat.  Machinery orders tumbled 10.4 percent. Non-defense capital goods orders, excluding aircraft — considered a proxy for future business investment — fell 4.5 percent in January.

In afternoon trading, the SPDR Gold Trust (NYSEARCA:GLD) gained almost .90 percent, while the iShares Silver Trust (NYSEARCA:SLV) jumped 4.3 percent.  Gold miners (NYSEARCA:GDX) such as Goldcorp Inc. (NYSE:GG) and Barrick Gold (NYSE:ABX) increased 2.6 percent and 1.2 percent, respectively.  Meanwhile, First Majestic Silver (NYSE:AG) and Silvercorp Metals (NYSE:SVM) gained 5.16 percent and 3.6 percent, respectively.

Although silver is often overlooked in favor of its big brother gold, it has outperformed every asset class year-to-date.  As the chart shows below, silver prices have gained more than 30 percent in only two months.  “Both gold and silver are lifted by an expectation of continued liquidity coming into the market,” said Frank McGhee, head precious metals trader at Integrated Brokerage Services LLC.  “Massive fund buying and predominantly technical factors boosted silver, which was undervalued compared to everything else and we are covering a lot of the ground today,” he said.

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To contact the reporter on this story: Eric McWhinnie at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com

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