Silver Monthly Recap for January, 2012

Silver "surfed" to a 19.2% gain in the month of January.

The first month of 2012 was a great month for silver, and it was probably just the first of many more to come. For the month, silver gained an astonishing 19.2%, rising from $28.18 per ounce to $33.60 on the London Fix market. Gold was the second best place to put your money, as it rose 10.8% from $1,574.50 to $1,744. Stocks also did well; especially the high-tech Nasdaq: it gained 8%, while the S&P 500 rose 4.4% and the Dow Jones Industrial Average gained 3.4%. Meanwhile, the U.S. dollar lost 1.1% against the euro.

Week 1

Stocks and precious metals did not trade on Monday, January 2, in observance of New Year’s Day. The forex was open, however, and the dollar improved against the euro, gaining 0.15%. When trading did open on Tuesday, stocks and precious metals were up across the board, as the dollar sank. Silver, in particular, had a strong showing, gaining 2.1% to $28.78. The dollar fell by nearly 1%, in contrast.

Wednesday saw stocks flat across the board, as the headlines were dominated by the Iowa caucuses. Ron Paul should have won, according to CNN’s entrance polls, but caucus-goers changed their votes to help deny the Texas libertarian an upset victory. Silver continued to outperform, gaining 1.4%.

On Thursday, January 5, gold and silver each pulled back as the Nasdaq took the lead, gaining 0.8%. Oddly, the dollar also showed strength, gaining a whopping 1.31% — this is the inverse of what one would expect. The following day saw stocks mixed, with the S&P and Dow down but the Nasdaq up again, while gold was up 1.1%, silver was up 1.7%, and the dollar continued to show strength.

For the week, stocks were up across the board. The S&P 500 gained 1.6%, the Dow 1.2%, and the Nasdaq an impressive 2.7%. However, gold matched the Nasdaq’s 2.7%, while silver outdid them both at +4.3%. The dollar gained 1.7% against the euro for the week.

Week Two

The second week of January was another good one for stocks. For the week, the S&P 500 gained 0.9%, the Dow gained 0.5%, and the Nasdaq continued to lead stocks at +1.4%.  Gold and silver both posted gains, +1.2% and +0.8%, respectively. Silver had been doing better, but the precious metal fell 3.1% on Friday, as the dollar gained 1.1% against the euro. For the week, the dollar was up 0.3%, too.

The news that drove the markets in Week 2 included a big jump in the Economic Optimism Index, lower retail sales numbers, more weekly jobless claims than expected, and, of course, more bad news out of Europe: this time, it was France that saw its credit rating get downgraded from AAA to AA – and remember, France is supposed to be one of the most fiscally responsible countries in the European Union! That this made the dollar post gains on Friday was not surprising, as the dollar is measured against the euro, but what did not make sense was how gold and silver fell. This logical inconsistency would be corrected in Weeks 3 and 4 of the month.

Week Three

The stock market was closed on Monday, January 16 in observance of Martin Luther King, Jr. Day. The London Fix market and the forex were both open, though, and gold and silver posted respective gains of 0.3% and 0.9%, while the dollar eked out a tiny 0.07% gain against the flailing euro.

When the stock market did open on Tuesday, stocks were up across the board: The S&P gained 0.5%, the Dow was up 0.4%, and the Nasdaq was up 0.6%. Gold and silver really shined, though, gaining 0.9% and 1.7%, respectively – silver breaking $30 on the London Fix, closing at $30.41. For its part, the dollar lost ground to the euro in what would be the first of three straight daily losses.

Stocks continued to post gains on Wednesday and Thursday, but turned mixed on Friday, with the Nasdaq posting a 0.1% loss. This could have been read as a sign that the market’s rally was losing steam, even as all three major indices posted rather large gains for the week: 2% for the S&P, 2.4% for the Dow, and 2.8% for the Nasdaq. Meanwhile, gold posted a 1.1% gain, trailing stocks; while silver beat the S&P and kept pace with the Dow at +2.4%. The dollar was down 1.9% against the euro – a really bad week for the greenback, especially considering the competition.

Week Four

Monday, January 23 was a huge day for silver – it gained 6.9% on the London Fix market to close at $32.45 per ounce. More bad news out of Greece did little to stoke the fears of stock traders, but something sure provoked a big jump in silver. Gold was up 1.4%; the dollar continued to lose ground. Stocks were mostly flat, although the Nasdaq did lose 0.1%.

Not surprisingly, silver pulled back each of the next two days. On Tuesday, it lost 1.5%, and on Wednesday, it fell another 0.9%. Gold also posted consecutive losses of 0.6% and 0.9%. But on Thursday, silver was up 5.3% and gold 4.3%; and Friday also saw gains for both precious metals. For the week, silver was up an astounding 10.3%, while the gold gained 4.4%. Stocks were mixed: The S&P posted a 0.1% gain, while the Dow was down 0.5%, and the Nasdaq up 1.1%. The dollar fell yet another 2.2% against the euro.

Week Five

Stocks were down across the board on Monday, January 30, and silver lost ground, too; falling 0.9% to $33.18 on the London Fix. Gold was up 0.2% to $1,729. Friday saw the S&P and Dow in the red once again, while the Nas posted a 0.1% gain. Gold was up 0.9%, and silver 1.3%. The dollar posted gains both days.

Summation

Silver "surfed" to a 19.2% gain in the month of January.

For the month, stocks did quite well. In fact, 2012’s was the best January for stocks in many years. But as good as stocks did – +4.4% (S&P), +3.4% (Dow), and +8% (Nasdaq) – both silver and gold outclassed them: Gold was up 10.8% for the month, and silver shot up by an impressive 19.2%! Meanwhile, the dollar fell by 1.1% against the euro.

The euro is a currency on its deathbed – and the dollar can’t even keep pace with it! Silver was up 19.2% this month, and it may have now established $30 as its price floor. I like these trends to continue: a flailing euro, a dollar that can’t even keep up with it, and higher gold and silver prices.