The gold price opened lower by $18.89 to $1,119.90 and the silver price declined by $0.50 to $18.30 as continued strength in the U.S. dollar pressured both the price of gold and the price of silver. The gold price retreated a day after once again failing to surmount the $1,145 to $1,150 per ounce range - a level that has kept a lid on the price of gold for the past several trading sessions. Gold mining stocks, as measured by the Market Vectors Gold Mining ETF (GDX), opened lower, driven lower by a weak gold price and general selling pressure in commodities and equities. Canada’s S&P/TSX Global Gold Index, a widely followed gold stock index also opened to the downside - led by declines of 3.2% and 3.1% in Canadian-based gold producers Agnico-Eagle Mines (AEM) and Goldcorp (GG), respectively.

A stronger U.S. dollar this morning is symptomatic of the liquidation pressure on all investment classes. Higher-yielding and riskier assets are facing the most intense selling with chief global commodity currencies, the Canadian and Australian dollars, both lower by over 1%. Emerging market stocks also declined with Brazil’s Bovespa and China’s Shanghai Composite leading the way lower. Oil resumed its recent correction, trading down $1.55 to $77.47 per barrel while copper was lower by $0.06 to $3.38 per pound.

The silver price was lower by 2.7% per ounce as the opening bell rang and remains roughly $1.16 below its 52-week high made in early December 2009. However, since the beginning of January gold’s sister precious metal has outperformed the gold price. In a recent commentary on silver, David Rosenberg, Chief Economist and Strategist at Gluskin Sheff and former Chief Economist at Merrill Lynch, who accurately warned of the credit risks that led to the financial crisis, set forth a bullish argument for the silver price.

Rosenberg, a self-professed “long-time gold bull,” discussed the significant discrepancy in attention paid to the silver price versus the more closely followed gold price. The economist went on to highlight several factors which remain in silver’s favor and highlighted that from a contrarian perspective bullish sentiment on gold is “infinitely higher” than that for silver - and that the price of silver remains over 60% below its prior peaks even after its strong performance in 2009. Moreover, for the ratio of silver-to-gold to return to its peak from January 1980, the silver price would have to triple. Relative to the price of oil, the price of silver could rise by 400% and still not match the height of the silver-to-oil ratio - also reached in January 1980.

At the conclusion of Rosenberg’s commentary he reiterated the case for owning both gold and silver by pointing to a McKinsey report which emphasized the numerous problems facing all fiat currencies - notably the U.S. dollar, yen, euro, and pound. Governments will need to monetize the expansion of public debt in order to offset another 5-6 years of deleveraging in the private sector, a fact that will lead to a series of currency devaluations. Finally, Rosenberg discussed the stable supply outlook for silver and noted that “all the low-cost shallow mines on the planet have already been gutted.“ As a result of these positive developments, he argued that exposure to silver - through the physical commodity, ETFs, and/or silver mining companies - will likely be a “very attractive investment“ over the next several years.