TANGIBLE INVESTMENTS - Los Angeles - by James O'Dell - Gold and Silver prices were sharply lower on Monday with Gold easing to $1,306.60 an ounce while Silver retreated to $20.90 an ounce after shorter term investors took profits when Gold posted its sixth consecutive weekly gain on Friday. Gold rallied to $1,345.00 an ounce on Thursday, its highest since March, after questions were raised about the health of Portugal’s largest bank, the Banco Espírito Santo, whose shares plunged 17 percent before trading was halted.
"Some of the fears about those headlines have diminished, and that has given investors who had been riding on Gold's momentum an excuse to take profits," said Jeffrey Sica, of Sica Wealth. But while the bank took steps to reassure investors of its integrity by replacing the CEO, Moody’s and Standard & Poor's downgraded the troubled bank even further into ‘junk’ territory on Friday. "Anytime when there is unease in financial markets, people come back to Gold. In the near term, however, investors are more willing to take profits after safe-haven rallies," said Thomas Capalbo, of Newedge.
Meanwhile, investor sentiment toward Gold is turning friendlier as the “outright bearishness…has greatly melted away,” says UBS. Gold is returning to investors’ radar for the first time in many months, they added. Many believe that the tensions boiling over in Ukraine, Iraq, and Israel are a large part of the reason for the change in investor sentiment.
Investors are watching developments in the Middle East very closely as Israeli troops mass on the outskirts of the Gaza Strip, and Iraq insurgents move closer each day to overtaking Baghdad. Ukraine and Russian rhetoric has picked up since Friday as well, with both countries blaming the other for weekend incursions into their sovereign territories, bolstering investor demand for Gold's safe-haven.
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