Gold & Silver Miners Rally in the Face of Declining Spot Prices

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By Eric McWhinnie | May 22, 2012 5:20 AM EST

Wall St. Cheat Sheet

On Monday, gold (NYSEARCA:GLD) futures for June delivery edged $3.20 lower to settle at $1,588.70 per ounce, while silver (NYSEARCA:SLV) futures declined 39 cents to close at $28.32.

Both precious metals traded mostly flat after posting large gains on Friday, as the U.S. dollar climbed to as high as 81.39 on Monday.

According to the latest Gold Demand Trends report by the World Gold Council, the world continues to have a strong appetite for the precious metal, despite higher prices in the first-quarter of 2012 when compared to a year earlier.

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For the first-quarter, gold investment demand jumped 13 percent to 389.3 tonnes, compared to 343.5 tonnes a year earlier. Within the investment sector, demand for ETFs showed a stark contrast from the previous year. WGC reports, “First-quarter demand for ETFs and similar products totaled 51.4 tonnes, equivalent to a value of $2.8 billion. This compares favorably with the first-quarter of 2011, when the sector saw net outflows of 62.1 tonnes.” That’s a swing of 113.5 tonnes in only one year.

In afternoon trading, the SPDR Gold Trust (NYSEARCA:GLD) decreased .07 percent, while the iShares Silver Trust (NYSEARCA:SLV) fell .76 percent. Despite bullion-related names ticking slightly lower, several miners continued to rally from multi-month lows. Gold miners (NYSEARCA:GDX) such as Barrick Gold (NYSE:ABX) and Newmont Mining (NYSE:NEM) both jumped more than 3 percent. Meanwhile, silver names such as Silver Wheaton (NYSE:SLW) and Endeavour Silver (NYSE:EXK) surged 4.5 percent and 5.8 percent, respectively.

Investor Insight: How Strong is Global Gold Demand?

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Disclosure: Long EXK, AG, HL, PHYS

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The article was first published by Wall St. Cheat Sheet and does not represent the views or opinions of International Business Times.

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