Gold plunged $84 an ounce today, 5.38%, closing at $1477 an ounce. By percentage, silver is down even more, down over 6.5% at the close of the market. Both closed at their lowest point in the past two years.
The sell off is being blamed on a variety of factors, mostly boiling down to two big uns:
1. Cypress and other countries perhaps being forced to sell their gold reserves in order to receive the ECB bail out - read more here. This would dump several tons of gold onto the market, increasing supply and theoretically driving down demand.
2. As the general investing public is gradually perceiving markets to be recovering from the crash and the Fed is starting talk about easing off the money printing quantitative easing train, there's been a slow move away from precious metals. Today's slide started as a more moderate down turn but then triggered off automated sell positions as it descended down past $1525 and $1500. As these price levels were passed and more sales book, more gold was dumped onto the market, further driving down prices.
So, at the end of the day, an ounce of gold is worth fewer USD at the end of today than it was this morning.
What action you'd take depends on your long term view of the economy. If you think we've turned the corner, the economy is stabilizing and that we'll see some good growth in the stock market, you may want to think about selling some PMs and parking that cash elsewhere.
On the other hand, if you feel like the future of the economy still looks grim and the recovery uncertain, this weekend might be a pretty good time to jump in and buy some discounted gold and silver.
What are your thoughts?