Bernard Hickey talks in a Double Shot interview with NZ Mint's Head of Bullion Mike O'Kane about precious metals in their regular monthly roundup on precious metals. See last month's roundup here.
O'Kane talks about how gold prices fell almost US$100 last week and how silver prices fell the most since the 1980s.
"As a speculative tool silver has been talked about as being in a bubble going back to December and November when prices doubled in a short period of time," O'Kane says.
A strong US dollar and concerns about global commodity prices were also factors in the falls, he says.
However, the Mexican and Bolivian central banks have been buying gold in the last year, adding to demand coming from European and Chinese central banks.
O'Kane talks about how gold supplies were growing at about 5 tonnes a day, although there has been talk that an extra 5-10 tonnes hit the market last week, seeming to trigger some stop loss selling by speculators.
The decision by the CME to increase margin trading requirements for silver trading was also a factor driving the market.
He also talks about new gold supplies coming from Africa and China as higher gold prices encourage production.
Five years ago the cost of mining gold was around US$350/oz. It has since risen to around US$900/oz, which still leaves a big profit margin for new mine producers.
"The demand to create new mines is obviously increasing," he says.
Volatile prices are likely in the coming months as investors watch the US Federal Reserve's battle to restart the US economy with printed money, China's battle to slow down inflation caused by its own money printing, and Europe's desperate attempts to prevent Greece's debt woes spreading to the core of the Euro zoen.
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