Gold (GLD) and Silver (SLV) Hold Steady: American Eagle Sales Soar

On Friday, gold (NYSEARCA:GLD) futures for February delivery decreased $3.30 to settle at $1,616.80 per ounce, while silver (NYSEARCA:SLV) futures slipped 61 cents to settle at $28.68.

The national unemployment rate decreased to 8.5 percent in December in another sign that the U.S. economic recovery might be here to stay.  Nonfarm payrolls increased by 200,000 last month, the Labor Department reported on Friday, the most in three months and well above economists’ expectations, while the jobless rate dropped to a near three-year low.

Investor Insight: Are Investors Getting Physical With Gold and Silver?

As suggested by yesterday’s ADP report, the private sector accounted for a significant rise in payrolls — adding 212,000 in December — while local, state, and national governments cut 12,000 jobs.  The unemployment rate fell 0.2 percent from an upwardly revised 8.7 percent in November, which was previously reported as 8.6 percent. December’s jobless rate is the lowest since February 2009.  However, the labor force participation rate fell to the lowest since 1984, signaling that the improvement in the unemployment rate is due to baby boomers retiring, and people giving up looking for jobs.

Although the U.S. dollar (NYSE:UUP) climbed higher, precious metal (NYSEARCA:DBP) investments held up rather well today.  In afternoon trading, the SPDR Gold Trust (NYSEARCA:GLD) edged .32 percent lower, while the iShares Silver Trust (NYSEARCA:SLV) decreased 1.8 percent.  Gold miners (NYSEARCA:GDX) such as Newmont Mining (NYSE:NEM) gained .10 percent.  Silver miner (NYSEARCA:SIL) First Majestic (NYSE:AG) also gained .28 percent.

Investors are becoming more interested in physical silver.  According to data from the U.S. Mint, American Silver Eagle sales reached a new record of 39.8 million last year.  The dramatic shift in physical silver demand is magnified when compared to U.S. silver production data.  SilverDoctors explains, “U.S. silver production has declined 50 percent since its high of 70 million ounces in 1997.  In 1997 American Silver Eagle sales were 3.6 million, which accounted for only 5 percent of domestic silver production.  Contrasted to today, Silver Eagle sales are estimated to reach 40 million while domestic mine supply will decline to 35 million ounces in 2011.  Thus, American Silver Eagle sales will be 114 percent of the total U.S. silver supply in 2011, what a difference in 14 years.”

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To contact the reporter on this story: Eric McWhinnie at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com