Silver chalked up a 45.50% gain on the year – MKS

( – The nominee for the year 2006 best performer and the winner is … Silver ! Silver chalked up a 45.50% gain on the year. Copper gained 40.60%. Palladium gained 32%. Platinum gained 17% on the year. Gold managed to gain only 23% on the year, but that s still well below the year $700/oz peak in May.

On the supply side, gold inventories were unchanged at 7.53 million troy ounces according to NYMEX data. Silver supplies were unchanged at 111 million troy ounces and copper supplies rose by 489 short tons to 34,071 short tons. The Euro hit a record high against the Yen today as it geared for its biggest advance since its debut in 1999. The Euro has rallied 11% against the dollar on the year, its first gain since 2004.

For the rest of 2007, the route of all precious and base metals would be very much depends on US economic growth, and whilst there are signs of a slowdown in the developed nations, the powerhouses of the Far East may determine what will happens next.

Technical indicators bounced where they should have from a bullish point of view. Sure enough, after gold establish its legs near its 200-day moving average in the region of $615/oz two weeks ago; last week it managed to advance about $15 more before the end of the 2006. Silver set in a parallel performance.

We also like to review the continuing global diversification away from the dollars; that Iran says it wants to be paid for oil in euros. The U.A.E. says it is raising its forex reserves percentage of euro from 2% to 10%, reducing the dollars it holds. Venezuela wants to be paid for its crude in anything but U.S. dollars. According to recent news reports, Russia and Indonesia are moving to price their oil exports in euros instead of dollars. The Swiss National Bank says that it has added yen to it $36 billion forex reserves, reducing U.S. dollars. Other countries plan to diversify their reserves away from dollars, including Sweden, Qatar, Italy and New Zealand.

It sounds like a skeptical trend. The thing is, if that perception continues to grow, additional pressure will be put on the dollar and that has long-term bullish implications for gold. A spiritual bullish perfect storm trend for precious metals will continue. In real terms, gold remains undervalued versus nearly all other commodities. The grand bullion Bull has a long way to go, but it just won’t go straight up.

MKS Gold & Silver, Daily Report
By Bernard Sin


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Marion Mueller

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