Gold and Silver

Gold fell from $1600.40 an ounce on March 28th to April 17th's close of $1386.25, a decline of 14.4% At its $1321.50 low on Tuesday, Gold was down 19.1% from its March close.  

As bad as gold was, silver was worse:

Silver is down 19% to Gold's 14%. The daily percent price change each day since the start of April is shown below:

	GC	SI
1-Apr	-1.2%	-3.8%
2-Apr	-0.5%	-1.0%
3-Apr	-0.9%	-0.6%
4-Apr	-0.1%	-0.1%
5-Apr	1.5%	1.7%
8-Apr	-0.2%	-0.3%
9-Apr	0.9%	2.7%
10-Apr	-1.8%	-0.8%
11-Apr	0.4%	0.2%
12-Apr	-4.2%	-5.0%
15-Apr	-9.6%	-12.0%
16-Apr	1.6%	1.0%
17-Apr	-0.3%	-1.4%

 Gold and silver moved down nine days and up 4 days.  Other than past Friday and Monday's monster moves, the markets had typical normal percentage changes with 7 days moving less than 1% up or down and 6 days closing more than 1%. How typical are these moves? And how extraordinary are the 4%, 5%, 10% and 12% daily movements in gold and silver?  (Note these are all based on closing prices.  Daily ranges, of course, were much higher.)

Below is a graph showing the daily close over close percentage changes for all 15 commodities in the VistaCTA basket from VistaCTA's May 2009 inception to the 17th's close:  

Silver's April 15th 12% single day decline was among the seven worst one day declines for any commodity in this period.  Oddly enough, the worst single day close/close fall was also silver, on September 23rd, 2011, when it fell 19.5%! The day before, September 22nd, it fell 10.1%. The two day 29.6% decline dwarfed the  two day 17% decline we saw this week. That coincided with the 3rdQ 2011 market break.

The structure of commodity markets may both contribute and contain major declines to two days.  It takes one day's surprise to create the margin calls that then bring the market lower as stressed longs are forced to liquidate.

Commodities have been in drawdown since April 2011. The economy is in sore need of demand and growth.  Only time will tell if this price action is a continuation move or reversal opportunity.