Precious metals quickly lose luster
On Friday morning last week, February’s employment situation summary was released. It showed a consensus-busting 295,000 jobs were added in the month and the unemployment rate dipped to 5.5%, its lowest level since May 2008. This solid report stoked fears that the Fed would likely raise interest rates sooner rather than later. The U.S. dollar surged, major indices sold off, Treasury bonds had a tough day and precious metals were clobbered.
SPDR Gold (GLD) dropped $3.14 or 2.73% while iShares Silver Trust (SLV) slipped $0.34 or 2.19%. GLD and SLV had been on a tear until late January then market volatility calmed and seasonal factors began to weigh on both. Almanac Investor subscribers were alerted to gold and silvers seasonal slump via email Alert on February 10. At that time long positions in PowerShares DB Gold Double Short ETN (DZZ) and ProShares UltraShort Silver were established in our ETF Portfolio. At today’s close DZZ is up 10.7% and ZSL is up 15.0%. Further upside by DZZ and ZSL is likely as seasonal weakness in gold and silver typically lasts until June and the dollar is showing no sign of weakening anytime soon.