Today saw an unexpected gain in the S&P 500 and the dollar, in spite of reports that the S&P is in the midst of a downward correction, buoyed by the Bank of Japan's buying of billions of US dollars with newly printed money, and their announcement of ¥10 trillion in earthquake recovery bonds. A summary of the ongoing fiasco and its implications for the global financial market can be found on ZeroHedge.
The push in the S&P 500 added a little bit to our Vanguard 500 Index, while continued weakness in precious metals saw gold rise only slightly, with silver dropping a few cents. However, as I write this, gold is up close to 0.50% and silver is up over 1.50% in after hours trading on the Hong Kong and Sidney global markets, so we'll see how things look tomorrow in holding my prediction of a Friday close of $1405-1410 in gold and just under $35 in silver.
With that out of the way, here are the numbers March 17, day 4:
Day 4
Results upon NY close of trading -- March 17, 2011:
- Gold closed at $1404.00 per oz, up $2.50 and 0.18% from yesterday. Silver closed at $34.23 per oz, down $0.03 and 0.09% from yesterday.
- VFINX closed at $117.76 per share, up $1.55 and 1.3% from yesterday.
Investment #1, Precious Metals:
- Percent return for the day: 0.05%
- Profit for the day: $43.53
- Total percent return: -7.9%
- Total profit: $-7,848.06
Investment #2, Vanguard 500 Index:
- Percent return for the day: 1.3%
- Profit for the day: $1,292.70
- Total percent return: -1.7%
- Total profit: $-1,743.06
Advantage: Vanguard 500 Index investment, by $6,138.12
I know that many of the gold naysayers are quietly nodding to themselves with smug superiority, because for the moment the Vanguard 500 Index investment is beating the pants off of precious metals, which remain choppy and continue to trade sideways. However, this is merely a temporary setback, and I'll explain why.
The Bank of Japan, the Japanese Central Bank, has injected a total of 60.6 trillion Yen over the past week. Since Japan is heavily invested in dollars, the additional dollar purchasing will be a strong upwards force on precious metals, valued both Yen and Dollars, due to concerns about inflation. Additionally, gold prices have been moving in tandem with oil prices, and the escalation of the conflict in Libya and the the inevitable military action against Gaddafi's Libya, will exert a very strong upwards pressure on gold and ultimately silver, as silver follows its bigger brother's lead. This will be compounded if Gaddafi -- as many expect -- orders the destruction of the Libyan oil fields and infrastructure, resulting in an explosion of oil prices well past 2008 records, and pushing gold and silver into new record highs.
So, even with the present weakness of gold and silver, I remain unfazed. Precious metals will prevail, and I'm looking for late April or early May for our precious metals investment to overtake our Vanguard 500 Index investment.
That is all for this evening,
Baxter
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