The US economy is once again on the forefront of this week’s news as it continues to defy expectations. While a rapidly improving economy may be enough for one to think that precious metals would be on the decline, both gold and silver have held their positions fairly well. Unfortunately, hold their positions is about all precious metals did this week.

Chinese Woes

Just in case you didn’t get the message the last few weeks, the Chinese economy has been slowing down and actually posting some very unimpressive numbers. This week there were reports that manufacturing numbers from the large Asian country are not nearly as impressive as they were only 12 months ago. Additionally, unemployment appears to be on the rise too, which is unlike anything we have heard out of China over the past decade.

It will be interesting to see how the Chinese government handles this going forward. While the Chinese situation may not be very bad just yet, if things continue this way it could mean for terrible economic times.

American Economy Booming, Still

This week was yet another good one for both US stocks and the US dollar, adding to a few previous impressive weeks. Not only did the dollar retain its impressive position, but US stocks also had a solid 5 day performance.

All of this news is great for American citizens, but it isn’t so good for precious metals investors. Despite the fact that this news is rather disheartening for gold and silver holders, they should be happy to see that their metals are not taking a nosedive. Typically, when a currency and stock markets improve like the ones in the US have recently, things like gold and silver lose value at an alarming rate. That has not happened, which speaks to the strength of precious metals today.

Moving Ahead

There are not many market-relevant news stories to report for the upcoming week, but an Italian bond auction is going to be weighing on the minds of many. The trading atmosphere in Italy has been quiet to say the least ever since the elections were held a few weeks ago.

Weekly Move

At the end of the week, gold had moved from an opening price of $1,579 on Monday to $1,593 at closing time on Friday. Silver, on the other hand dropped from $29.07 to $28.85.

Over the course of the past month the end of the week has seen gold finish significantly worse off than it was when the week had started. While this week’s results were not very different, the amount by which precious metals had fallen is not quite as significant as it was in week’s past. An increasingly powerful US economy has done its fair share to make sure gold and silver both stay subdued.

US Economic Recovery

Ever since Obama was re-elected by the US people, critics have been quick to note that he has done little to take our economy to the next level. Sure, he helped us out of a recession, but for many this was not good enough. By midweek this week there was not a critic to be found because the Dow Jones hit an all-time record high; not only did it hit it, it maintained an impressive stance for most of the week.

This news is good for the American people as a whole, but it is not so good for investors in precious metals. The reason an improving economy is bad for gold is because now investors will be more apt to make riskier investments instead of relying on the “sure thing” that gold usually is. Even though gold is struggling a bit as of late in the US, it is performing very well elsewhere around the world.

The Benefits of Currency Wars

In an effort to spur economic growth, a plethora of countries from all corners of the world are attempting to devalue their currency with hopes that exports will increase. If you know anything about precious metals investing, you know that whenever people begin to lose faith in paper monies, they tend to reciprocate by putting all their faith in precious metals.This is exactly the case in many parts of the world and is the exact reason why we are witnessing increases in the demand for gold in places like Brazil, Iceland, and Japan.

Investors in these places are taking advantage of a continuously falling currency much like investors did in the US only a few years ago. Who knows how long these massive currency devaluations will be going on, but as long as they are local precious metals investors will be having a hay day.

Moving Ahead

As this week wraps up, we have no choice but to set our sights on the week ahead. It will be interesting to see if US stocks can improve upon their already massive gains, and if they do, how will gold react?

Our focus next week will also be on Europe as their debt crisis continues to grow with no clear signs of any solutions.

Weekly Move

From the time markets opened at the beginning of this week to their closing on Friday, gold had moved from $1,579 to $1,580. Silver transitioned from $28.68 on Monday to $29.02 at the end of the day Friday.