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Silver Cheapest In More Than Three Years
Posted May 1st, 2014
Los Angeles CA, May 1 (Tangible Investments) - by James O’Dell - There was mild volatility in the price of gold on Wednesday, as the precious metal eased $4.95 or 0.38 percent to close the month of April at $1,290.70 an ounce and a slight gain, after the Fed confirmed at its April policy meeting, by unanimous vote, that it would continue the scaling back of its massive quantitative easing (QE) program for a fourth consecutive month.
Silver retreated sharply, sliding $0.30 or 1.54 percent to close at $19.15 an ounce, as the gold/silver ratio reached its widest gap in 3 1/2 years, so that it now takes 67.40 ounces of silver to buy one ounce of gold.
"Silver is expected to underperform gold as the yellow metal attracts demand from safety-seeking investors," wrote Barclays in a note on Thursday. The U.S. Mint reports April gold coin sales rebounded from the seven month low reached in March on an uptick that many are attributing to safe-haven buying spurred by the Ukraine crisis.
The Fed was undeterred by the latest report on GDP showing a dismal 0.1 percent annual growth rate when economists were expecting something closer to 1.3 percent. Tangent Capital’s Jim Rickards remarked in December that the Fed may be tapering its QE into weakness. "This certainly is going to give Janet Yellen's camp a lot more ammunition to remain on the more neutral to dovish side," said Citi's Richard Cochinos, ahead of the Fed's decision.
Peter Schiff, of Euro Pacific Capital remains firm in his belief that the Fed will be unable to continue tapering its bond buying program, and when the Fed makes that announcement, the gold price will soar. Some believe it may be a pause in the taper that policymakers were discussing when they held a rare closed-door meeting on Tuesday to discuss "medium-term monetary policy issues," according to a notice posted on the Fed's website. There have been no further details released by the central bank about the substance of the meeting.
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