Silver, Gold Prices Plunge on Trump's Fed Pic

As a result of the penny project, we got back into watching silver prices. After I retired, I got bit a bit by the silver bug. I bought a few bullion coins, but the price stayed stubbornly around $20 an ounce for years, and I kind of lost interest. When I started updating our family coin collection, inherited from both sides of our family, I checked it out, and was shocked to see silver around $50! Since then it has been steadily (well, more or less, like all commodities, it does bounce around) rising, until yesterday it passed $120. Then today I looked, and it back down to $80 ish! What happened? CNBC, Silver drops 30%, gold tumbles 10% as Trump Warsh pick eases Fed independence fear, triggers dollar rally.

Gold and silver prices plunged Friday, as President Donald Trump’s nomination for the next chair of the Federal Reserve, Kevin Warsh, appeared to relieve concerns about the central bank’s independence and sent the dollar soaring.

Spot silver was down 30% at $80.55 an ounce, trading at its lows of the day.

Meanwhile, spot gold shed around 11% to trade at $4,812.71 an ounce. Gold futures dropped 9.1% to $4,980, trading below $5,000.

The sharp moves down were initially triggered by reports of Warsh’s nomination. However, they gained steam in afternoon U.S. trading as investors who piled into the metals raced to book profits. Metals were also under pressure as the dollar spiked higher, making it more expensive for foreign investors to buy gold and silver and spoiling the theory that metals would replace the greenback as the globe’s reserve currency.

The dollar index last traded around 0.8% higher.

So, just think about this. Until 1964, dimes, quarters, half dollar and dollar coins were minted with "coin silver " a 90% silver, 10% copper alloy, which constituted the value of the coin. Subsequently, except for bullion coins, the coins were minted with nickel alloy cladding on top of a copper core (much cheaper). The 1964 and earlier dimes contained 0.07 Troy ounces of silver, which, yesterday at one point was worth $8.40 from the silver value alone. Today, only $5.60.  Still, it buys about the same candy bar that it did in 1964, when a 1 oz Hershey chocolate bar cost about a nickel. Today, $2-3.