As stocks hit new highs, gold and silver suffer

Precious metals tumble as inflation fears ease and the US economy shows strength.

By Charley Blaine Apr 2, 2013 6:42PM
Yes, the Dow Jones industrials ($INDU) and the Standard & Poor's 500 Index ($INX) closed at record levels Tuesday. Yes, the big 2013 rally continues.

But the real action was in gold (-GC) and silver (-SI). Gold in New York fell by $25 to $1,575.90 an ounce. That was down 1.6% on the day, and it continues the pressures that have pushed gold lower for most of the year.

Silver fell by 69.6 cents to $27.25 an ounce in New York. That was the lowest close for the metal since late summer 2012.
Gold is down nearly 6% this year and down about 12.3% from a closing peak of $1,796.50 an ounce on Oct. 4, 2012. While silver is off nearly 10% in 2013, it's also down about 22% from an Oct. 1, 2012, peak at $35.608 an ounce. A loss of 20% or more is the popular definition of a bear market. 

The reasons for the selling are multiple, all having to do with the dollar: Arrow Up (© Stockbyte/SuperStock)
  • There are worries about Europe and the ultra-high unemployment rates in Spain, Italy, Greece and Cyprus.
  • Japan has been working to push the yen lower to make its exports more competitive globally.
  • The U.S. economy is looking stronger this year, despite a relatively weak jobs market and the potential that federal spending cuts instituted under a 2011 budget deal will stall domestic growth.
  • There have been few inflationary pressures. That had many investors worried when the Federal Reserve embarked on its latest bond-buying program. It's usually called QE3, for a third round of quantitative easing.
Now that the inflationary fears are easing, there's not so much need to hoard gold, and investors are selling and grudgingly admitting that Chairman Ben Bernanke's policy is working. For now.

If there is an immediate reason to be at least wary. Friday is when the Labor Department reports the March unemployment and non-farm payroll numbers. Both are expected to be decent.

Bright Media Corp. estimated late Tuesday that the economy added 223,000 jobs in March. The consensus estimate is about 195,000 with the unemployment rate holding at 7.7%.

The Dow and S&P 500 moved higher in large part because of a big rally in health-insurance stocks. They surged because it appeared premiums paid under the Medicare Advantage plan could move higher. Most investors had expected premium cuts.

The Dow closed up 89 points to 14,662. The blue chips had been up as many as 111 points. The S&P 500, which set a new closing high on Friday, closed up 8 points to 1,570 after reaching as high as 1,573.66.

This last level is important. It was 2.4 points below the S&P 500's all-time intraday high of 1,576.06, reached on Oct. 11, 2007. A solid push through that level could mean the rally has the strength to move higher.

The Nasdaq Composite Index ($COMPX) climbed 16 points to 3,255, its best close since Nov. 7, 2000.

So, health insurer UnitedHealth (UNH) was the top performer among the 30 Dow stocks, up $3.40 to $62.37 after hitting a 52-week high of $63.95. UnitedHealth contributed 26 points to the Dow's by itself. 26 Dow stocks were higher.

DaVila HealthCare Partners (DVA), which provides kidney-dialysis services, jumped $7.29 to $127.20 and was the the top performer among S&P 500 stocks. It, too, hit a 52-week high: $128.74. Eight of the top 10 S&P 500 performers on Tuesday were healthcare stocks.

At the same time, investors were cheered by a gain in factory orders in February. The gain was spurred by growth in commercial aircraft and automobiles.

March auto sales were up 3.4% from March 2012, and the seasonally adjusted annual sales rate moved up to 15.27 million units from 14.14 million units in March 2012. There was a downside to the sales: the sales rate was the lowest of 2013, but the rate has topped 15 million for five straight months.

Ford Motor (F) shares were up 11 cents to $13.01. General Motors (GM) shares rose 13 cents to $27.93.

If there was a theme to the month it was that light trucks, including sport-utility vehicles, were the big sellers. Most manufacturers saw car sales decline; Honda (HMC) was an exception.

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63Comments
Apr 2, 2013 7:33PM
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Dow  Transports  is  telling  a  different  story  today.  Many    investors  who  look  at  P/E  ratio  don't  like 21/ 1  and  dividend  yields  of  1.3%. ~ (What  goes  up,  must  come  down !?)
Apr 2, 2013 9:06PM
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The only reason stocks are going up is because the euro is about to collapse !
Apr 3, 2013 7:12AM
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The dollar is getting more worthless by the month to the tune of 85 billion a month! That the Federal Reserve is printing out of thin air and injecting into the market. It's a sad situation when we have a news media in this country that's in the pocket of Progressive Socialist in Government. Painting a rosy picture of a market that's real growth is only due to being propped up by the government printing press. Also a economy with barely a pulse or job creation a full two years after their so called economic recovery. I wonder how long their sharraid will last before Americans still in support of the current administrations policies finally see them for the failures they truly are?
Apr 2, 2013 11:23PM
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 The powers that be up to their old tricks. Remember 08. Gold hit 1000 corrected to 700 then within 6 months we were off to the races. The good old days. Nothing has changed. Fundamentals still there. TPTB are still buying but want it cheaper so are whacking it into submission. It may be just as painful this time around. It will find support eventually then we will be off to the races again. The bull market in PMs is far from over. The Brics and central banks are the whale to follow. If and when they stop buying I will be concerned. Stock market correction is a comin and those WS whales know it too. PMs are a long term investment, hedge against inflation and wealth preservation tool. Just ask the Germans that's why they want theirs back on sovereign soil. TPTB are just shaking out the weak hands. Both gold and silver may drop lower but will find buyers and a floor on the way down. The brics and banks want the all the gold they can get before it is retooled into part of the new global currency someday. Till then buy low and lower and lower then sell high. JMHO.......
Apr 3, 2013 8:51AM
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Have never seen the Fed so involved in artificially propping up the stock market and major Wall Street banks. What is it now QE3, 85 Billion a month, 1 trillion a yeay? All this on top of the 3 Trilllion dollar .0003% percent loan given to the Wall Street banks on top of the TARP loans. Oh they kept that hid for about 3 years. Realistically how long can the Fed keep this wet dream market afloat?
Apr 3, 2013 4:36AM
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Please!! All you who say the dollar is worthless!! Send me all those worthless dollars!! I will gladly take them off your hands!!
Apr 2, 2013 11:11PM
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It's pretty easy to see that everything in our financial markets are being manipulated..What's even worse is corrupt banksters are starting to give mortgages again to people who can barely afford to meet their monthly bills. These greedy banksters are going to crush the finances of world economies!
Apr 3, 2013 8:45AM
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Since the latest gun control controversy ammunition is  getting scares and the shelves at most gun dealers even walmrt are empty.

 

Looks like Lead may be a precious metal and a good buy right now...

Apr 2, 2013 11:52PM
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Well anyway I was adding more to our Gold positions this morning...

But then commenced to take a haircut, this p.m....

Not only had gold been falling early, but our miner had a problem in Brazil about off loading product for shipment....

Today was not the best day for us to buy....Oh well...que,sera,sera...

 

We aren't on suicide watch, we just fixed a stiffer drink..Too busy to worry about little things..

Ciao.

Apr 3, 2013 9:40AM
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To comment on the recent DOW, S&P, jobs, housing and dollar rebound. Stein's law.........“If something can’t go on forever, it will stop.”-Herbert Stein, economist

 

Take advantage of the recent market upswing, be weary & mindfull that it will not go on forever. It is artificially propped. Interest rates will have to rise at some point in time. Inflation will not be easily concealed and covered up by the government's false CPI data. What comes up, must come down. Learn from the lessons of 2007-2009 and what caused them. Remember that 16 trillion and counting, fiat money printing expanding the money supply, social programs, spending without budgets or means, infinite borrowing with no savings or production is mathematically unsustainable, there will be a day of reckoning at some point in the future. This is all common sense, regardless of investment or financial experience. Do not make the same mistake twice, don't get suckered in with the same dance, different song. That's all I'm saying.

 

Apr 2, 2013 8:29PM
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I'm not sure why anyone would be invested in stocks, metals or real estate right now. All three have been artificially inflated by Bernanke dollars and have no threshold assets to retard loss. As they go, they go all the way. In all three venues there are very large players wholly leveraged without safety. Collapse is eminent and both derivatives and debt contracts can force the large players into default. You won't get the chance to sell when the chain reaction drives all three to the bottom.

 

Are you looking out the window?

Apr 3, 2013 12:22PM
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Yes, if they could take the fraud out of Welfare and the likes of Foodstamps ,etc...

We could probably build new Highways and Bridges (repairs)..

And start paying down our debt...

Those people should get some real hard time....Working on the roads in a Chain Gang..

The Fraudsters..that is.

Apr 3, 2013 8:36AM
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We have run out of other people's money. We have run out of borrowed money. Treasury's bonds are junk that no one is touching. We are now electronically creating money aka the modern day printing press. The Federal Reserve Bank is buying the $1 trillion annual deficit. This has been going on since 2008 with Tarp 1. We are getting away with this because th USA is too big too fail. If we financially collapse China our wholesalers will go down with us. Also e.g. Honda, hyanduai etc go down and japan and s.korea as well. Brazil owns 26% of our poltury market with its purchase of Pilgrim's Pride. A big factor is the USA is the dept. of defense for most of the world. Without us Japan,S. Korea, Germaniy etc etc would have to allocate 20%+ of their revenue for their own defense including a nuclear catchup. So the world is looking the other way as we print dollars to stay alive. Soon the music will stop and the dollar will be removed as the world's reserve currency and become junk with hyper inflation. The majority of Americans have rendered basic math and ecomomics politically incorrect and inconvenient to their entitlement lifestyle. Financial stability has become an american entitlement. The USA has no future.
Apr 3, 2013 11:21AM
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hitchhiker,

 

I'm no fan of Glen Beck but he's right about precious metals. Don't just read the headlines put out by mainstream media do some research and find out what's going on behind the scene.

Apr 3, 2013 11:09AM
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The cheerleaders of Wall street don't tell us the real news. The stock market is being artificially inflated thru the Federal Reserve Bank QE. We could be heading towards another financial disaster similar to the one we experience in 2008.  Except this time it could be worse.

 

The recent events  in Cypriot should serve as a wake up call to all of us that things are not as they appear. And as far as precious metals goes they are manipulated by JPM to make the dollar look strong. A law suit was brought against JPM which was dropped. Why? Because of JPM political clout.

 

Banks throughout the west are financially insolvent. When Europe's financial system implodes then that will affect us in the U.S. Other countries such as the BRICS ( Brazil, Russia, India, China, South Africa) see the handwriting on the wall and is actively seeking a way around the USD ( world's reserve currency) they just opened the World Development Bank as a way to circumvent the IMF, BIS and the world bank.

 

Don't beleive the hype spewed by the main strem media.

Apr 3, 2013 7:27AM
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Pulled all my stocks yesterday...over to stable value....I sense a BIG fall in the market and a huge scrambling into precious metals. I'm rarely wrong
Apr 3, 2013 9:04AM
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The rest of the world is in a race to abandon the dollar as the world currency, hang on to your hats, gonna be a wild ride!
Apr 3, 2013 11:33AM
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ABS...I keep leaving you clues before I go, to give you a treasure hunt of sorts as to where I abode.

I probably will never admit to the correct location...Within less than 500-600 miles...

 

I could be near your backyard, actually I'm right here with you; On your PC or Laptop..

Miss Lilly says I'm addicted and only laughs at the thought of me fading away after 10,000..

That makes me stronger every day....I've almost given up Twinkies, and I was addicted to them for almost 65 years...This is a walk in the Park..

 

Only about 40 more to go...Good luck in your endeavors.. 

Apr 3, 2013 2:09PM
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Interesting observation for anyone who still believes in the dollar. Watch a movie from the 40s or 50s. They will act as if $100 is a small fortune. Does anyone today feel like $100 is a small fortune, absolutely not. 
Apr 3, 2013 2:06PM
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Someone explain to me why bitcoins are going parabolic and precious metals are taking a beating? I like bitcoins, they make more sense as money and a store of wealth than government fiat money. Precious metals also make an excellent store of wealth and they have intrinsic value unlike bitcoins, but I give bitcoins the edge in the money department. Bitcoins are more convienent and digital. Still why are pms tanking? doesn't make sense to me. 
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