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What Has Caused the Recent Pullback in Gold and Silver Prices?

At Atlanta Gold and Coin Buyers, we not only educate our customers on the type of coins that we buy and sell, but we also attempt to keep up with macroeconomic trends that affect the price of precious metals, including gold, silver, and platinum.

Many of our customers have inquired as to the recent pullback in gold and silver prices and are curious as to what may have caused the recent decline.  There are several factors at play, but the greatest contributing factors appear to be the sovereign debt crisis in Europe; more specifically in Greece, who is likely headed toward a default, and signs of a slowdown in the U.S. economy.

The strength and weakness of currencies is all relative, so in cases like we’re experiencing now, where the Euro has been declining due to threats of default in Greece, we typically see an upswing in the strength of the dollar.  When this occurs, we oftentimes see a pullback in the price of gold and silver, as commodities are typically inversely related to the strength of the dollar; although, this isn’t always the case.

Furthermore, with the effects of QE2 wearing off, we’re seeing signs of structural weakness in the U.S. economy.  A slowdown in the economy typically results in a pullback in commodity prices, as the belief is that there will be less overall demand for commodities.  While gold, silver, and platinum are considered to be money by many folks, they still tend to be affected by the strength or weakness in the overall economy.  However, it’s not uncommon for this correlation to diverge over a relatively short period of time.

So what are the future prospects of gold and silver, and how does that relate to buying and selling gold, silver, and platinum coins?  The fact of the matter is that the United States also has record level debts and deficits, so a continued strengthening of the dollar over the long term doesn’t appear to be likely.  Furthermore, while inflation is relatively tame at the moment, further intervention by the Federal Reserve may increase inflation expectations, resulting in strong future demand of gold silver, and platinum, and more specifically related to our business, gold, silver, platinum and numismatic coins.

We’re not market forecasters at Atlanta Gold and Coin Buyers, but we do try and keep a finger on the pulse of the economy in an attempt to explain changes in the price of gold and silver, and hope that this short article sheds some light on the current situation.

Whether you’re in the market to buy or sell gold, silver, platinum, or collectible coins, Atlanta Gold and Coin Buyers can help!  We’re an active buyer and seller no matter the current market conditions, as we’re here to stay as Atlanta’s preferred gold and coin dealer.

Give us a call today at 404-236-9744 for a free evaluation and appraisal of your gold, silver, and platinum coins, bars, and bullion, or to pick up some gold and silver coins at a slight discount relative to recent prices.  We look forward to hearing from you and earning your business!

Tony Davis
Tony Davis