Gold and Silver Sink on Renewed Greek Concerns

On Tuesday, gold (NYSEARCA:GLD) futures for April delivery fell $31.80 to settle at $1,672.10 per ounce, while silver (NYSEARCA:SLV) futures declined 91 cents to close at $32.78.  “Gold this year has been driven by exchange-rate mechanisms. Any dollar strength has not been positive for gold,” said Citigroup analyst David Wilson.  Gold closed at its lowest level in six weeks on Tuesday.

The U.S. dollar (NYSE:UUP) climbed higher as the volume was turned up on the Greek tragedy.  A memo from the Institute of International Finance revealed that a hard Greek default could cost 1 trillion euros of damage to the euro zone.  The private-sector involvement in a debt swap is also raising concerns.  “Rumors circulated earlier that the PSI ‘invitation’ would be extended by a week due to low participation have been officially denied, but rumors themselves illustrate the market’s apprehensions,” said Marc Chandler, global head of currency strategy at Brown Brothers Harriman.

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In afternoon trading, the SPDR Gold Trust (NYSEARCA:GLD) declined 1.85 percent, while the iShares Silver Trust (NYSEARCA:SLV) fell 3.3 percent.  Gold miners (NYSEARCA:GDX) such as Barrick Gold (NYSE:ABX) and Goldcorp Inc. (NYSE:GG) declined more than 2 percent, as Yamana Gold (NYSE:AUY) dropped more than 3 percent.  Meanwhile, silver miners (NYSEARCA:SIL) such as Endeavour (NYSE:EXK) and Hecla Mining (NYSE:HL) declined 3.7 percent and 2.9 percent, respectively.

Despite recently announcing earnings per share of $1.00 for 2011, a 167 percent increase from the prior year, shares of First Majestic (NYSE:AG) tumbled 6.5 percent.  Keith Neumeyer, President & CEO, stated, “Our dedicated team of management and staff have done an outstanding job and should be congratulated for their efforts in 2011. The year marked the eighth year in a row that First Majestic has achieved record production of silver. Not only is this a great achievement, but our growth is not slowing down. As the fastest growing and purest silver producer in the world, management’s focus and top priority remains to continually deliver shareholder value.”

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To contact the reporter on this story: Eric McWhinnie at

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