For this veteran newsletter writer and author this was not his first book on precious metals. He wrote one of the best selling investment books of all-time in 1978 about how to survive the coming bad times and then also strongly recommended buying gold and silver.

300% gain

So six years on from his latest bullish book on precious metals – after more than two decades as a bear – and you can only conclude that the maestro got it right again and knows what he is talking about. Gold and silver have both trebled in that time.

Just think how other asset classes have or have not performed since 2006. US housing is a disaster and stocks have gone nowhere. The whole world hase been through a major financial crisis and recession and now teeters on the brink of a double-dip.

But Ruff’s observations are still relevant for two reasons. First off, we are nowhere near the $5,000 gold and $100 silver prices that he forecast back then. Secondly gold and silver have gone up by the same amount, silver has not outperformed.

Momentum trade

At face value then gold and silver will both at least triple again if Ruff’s thesis is correct, and it has been for six years now. The money printing that he very clearly and specifically identified as the reason for these price rises not only continues but is accelerating as central banks become more and more desperate to head off another financial crisis.

Will Ruff ultimately prove correct about the outperformance of silver as well? It looks highly likely. The silver price spike last April to its 1980 all-time high did demonstrate outperformance, albeit briefly. Silver supplies are tight and in a smaller market than gold so such volatility can quickly re-emerge.

The last issue of ArabianMoney highlighted ways for investors to gain the most from a surge in the silver price (subscribe here and we will send you this issue free). Howard Ruff got their early but the best is still to come for silver investors.

Elliott Wave theory takes patterns established for past price movements and uses them to try to predict the future. It is far from infallible but has quite a good record of success. It can also be rather complicated with its use of mathematical series.

Wave three

Mr Field explains: ‘Silver, as with gold, is starting intermediate wave 3 of Major THREE, which should be the longest and strongest wave in the bull market. It should certainly be longer than intermediate wave 1 which was the gain from $8.77 to $49.52, or +464 per cent.

‘Thus the gain in wave 3 of Major THREE should be larger than +464 per cent. It should be a gain of at least 500%. Starting from the $26.39 low, a gain of 500 per cent would produce a target price of $158.34 for silver. That is the number which equates with the $4,500 price forecast for gold and produces a silver to gold ratio of 28.4 ($4,500 divided by 158.34).

‘The gain in gold was forecast to be 200 per cent for this move while the forecast rise in the silver price is 500 per cent. Silver is again predicted to perform better than gold based on these Elliott Wave calculations.’

However, Mr Field is careful to add: ‘A word of caution is appropriate at this stage. All Elliott Wave studies are based on probabilities. While the wave counts may provide a high degree of confidence in the forecasts, one cannot be 100 per cent certain of any forecast.

‘It is necessary to have a point at which it is obvious that the forecasts are wrong. In the case of this silver study, the line in the sand is at $26. If the silver price drops below $26 the odds are that the above calculations will not work out.’

Volatility warning

Finally he adds something readers of ArabianMoney have all heard before: ‘A further word of caution: silver is not for the faint hearted. Silver is considerably more volatile than gold and the corrections are much larger. Silver corrections can and do happen quickly. They are emotionally gut-wrenching and it is easy to get shaken out of one’s position near the bottom of a large correction.’

That said Alf Field’s analysis counts for a great deal in the world of precious metals and must be stacked up with the other evidence that made silver the pick of the year for this website (click here).

Silver rose above $34 an ounce in Asian trading yesterday while gold is above $1,750 again. The bulls are talking about how long it takes to exceed the $48 and $1,923 highs set last year.

Dubai Souk

The talk of the Dubai Old Gold Souk is that silver will hit $58-60 an ounce by September (click here), though it is still hard to find anybody prepared to stick their neck out beyond $2,000 an ounce for gold, albeit possibly within a couple of months.

Global equities have rallied in thin trading on the back of economic data that is already history. When the statistics for January come out they will likely confirm a global slowdown in trade and exports. The eurozone crisis and particularly cold winter weather will see to that.

Market traders have also become bored stiff with the Greek debt crisis. However, it still threatens to drop another Lehman on to bullish complacency that flies in the face of the reality of a recession in Europe and slowdown in Asia.

Manufacturers now reporting increased output may find themselves with goods left in their yards this month, and anecdotal evidence of further redundancies suggests unemployment is still moving in the wrong direction.

Will stock markets soon be plunging from their current six-month highs? The notion of an economic recovery is surely an obvious illusion when we know that the world’s largest economic bloc is already in the midst of a double-dip recession.

Greek gifts

Boring as it is the interminable negotiations of the Greek crisis are not going well. They should have wrapped up almost a week ago. Never trust Greeks bearing gifts as the Trojans learnt to their cost.

That probably means the precious metal price surge is going to reverse alongside a re-run of the 2008 global financial crisis, unless the ECB can pump so much money into its banking system that a Greek default can be easily absorbed and then all that liquidity will push up gold and silver to even higher levels.

For precious metal investors this could be the annus mirabilis when everybody piles into hard assets because they are running scared from paper.

Having tipped silver as going to be the top performing asset class for 2012 (click here) it is naturally the next step to consider best how to actually put your money into this precious metal. Readers of our newsletter will get this advice.

We can only note that from an investment perspective this makes our newsletter a very good buy. Even a modest investment in silver last month would have risen by more than enough to cover the subscription.

Getting gold

Gold is a far easier and better understood investment than silver. Dubai investors can buy physical gold in the souks of this city tax-free and for only a tiny percentage above the spot price. The gold ETFs are well known and there is one quoted in Dubai too.

Yet silver holds out the promise of higher returns than gold as the bull market for precious metals gains additional traction. Occasionally bearish analysts scare investors with stories of deflation and depression that would impact on gold and silver.

But these tracts always ignore money printing by the central banks and the huge creation of money by the global central banks. Consider this chart from our friends at Agora Financial:

If that is not monetary inflation staring you in the face then you have very bad eyesight. That is why silver prices are up tenfold in a decade and the gold price by a factor of seven. Both metals hit all-time highs only last year.

Recently the ECB joined in with $645 billion in a new credit line for the eurozone banks, and that is going to be extended to $1.5 billion in February. And meanwhile the Federal Reserve is well known to be lining up QE3 in readiness for a blow-up in the eurozone crisis. China is also easing up on its recent money tightening for the same reason. The UK and Japan are big money printers.

Anybody who thinks this is going to end well for paper money just has to be joking. We have seen the debasement of the past decade and its impact on precious metals. This is only going to get worse, or rather better for gold and silver.

Silver outperforms gold in an upswing, so it is only logical to consider how best to leverage up in silver.

He writes: ‘On the seven-month chart for gold we can see that on Wednesday it broke out from the consolidation pattern that it has been stuck in since it peaked last August-September. This was a strong move on significantly increased turnover, which is bullish, and was a move confirmed by a massive upblast by precious metal stocks.

‘This breakout is therefore viewed as marking the end of what has turned out to be a period of consolidation, and the start of a major uptrend that should take gold much higher – comfortably to new highs.’

Major uptrend

Clive Maund’s conclusion is that a major uptrend is just starting in gold and silver, their ETFs and stocks and that this is a good time to buy if you have not already.

The monthly ArabianMoney investment newsletter published tomorrow will give some interesting ideas on how to leverage up the coming silver price increase to subscirbers only (click here). From CliveMaund.com:

We think silver investors will do better than that over the next three years. Global money printing and a tight supply position for this precious metal should lead it to outperform gold. Is there any sign of an end to money printing? Hardly.

Taming volatility

However, silver is extremely volatile and so calling the short-term price movements is particularly hazardous, and indeed the buy-and-hold approach avoids having to do so.

We know that timing big market swings can be very profitable. But only if you get it right. Get it wrong and you may have lost part of the long-term bull market and never see your money back.

By way of illustration we know some readers got their gold market timing last year right and sold out above $1,900. Well done! But don’t sit their with your cash until it passes that level again, or you have lost out: you timed the market right and still lost money!

So what about silver right now? The metal has gotten off to an excellent start to the New Year. It is up 14 per cent, comfortably outperforming any other asset class.

And yes ArabianMoney did suggest at the end of last year that this would probably happen (click here). But the silver price is now a bit overbought and at the top of the channel that the better chartists like Clive Maund see as likely to trigger a retracement.

Deja-vu

Back to fundamentals and we can see just why this price correction might well happen. Stock markets have rallied into the New Year and look ripe for a downturn with the Greek debt crisis entering a critical phase and the oil market facing a showdown with Iran over sanctions.

Then again the market optimists may have it right and silver will surge ahead on a settlement of the Greek debt and a concordat with Iran. However this leaves us worried that the short-term silver price surge may be over for obvious reasons.

That said the word in the Dubai Old Gold Souk is that silver will be around $60 an ounce by September (click here). Silver remains the ArabianMoney pick of the year for 2012 (click here).

Are we confident enough about a short-term sell-off to abandon a long-term position in silver? No. The next issue of the ArabianMoney investment newsletter (click here) will explain how to leverage a long-term position in silver for the maximum gain, and that is a lot easier than trying to make a short-term call on a volatile metal.

In theory holding rates low ought to encourage bond holders to exit this market. The return on this investment is negative after inflation, a guaranteed loser for capital holdings not a preserver of wealth unless you think the other options have even more downside.

Fear trade

It is a fear trade. Equities rallied very modestly on this news. In previous years stocks might have surged as the yield on equities is far higher than the yield on bonds, or at least still in positive territory.

But then stock markets around the world have lost their momentum and volumes. Famous market timer Jo Granville thinks the game is up and the Dow Jones will plunge 4,000 points this year (click here).

It is an extreme forecast but these are extreme times with the eurozone on the brink of tipping the world into a second global financial crisis and the Iranian dispute threatening $140 oil this summer according to the IMF.

Reason enough to be cautious. But as Dr Marc Faber continues to warn investors the US T-bond just has to be a long-term loser at these levels of interest rates. How long is the long-term? Is it beyond three years or within that timetable?

Certainly the Fed is preparing the market for QE3, a second round of electronic money printing which it is desperately keen to keep as a policy response to the imminent eurozone crisis.

But investors must surely scratch their heads. How much money can be pumped into the global economy before you get much higher inflation? Which asset classes will benefit from inflation and which lose? Bonds definitely look a loser, for how long can the Fed actually keep rates at these levels?

The Central Bank of Italy would love to keep its rates near zero but the market has long taken over, and low ECB rates mean nothing for Italian bonds. The ECB still has Germany as its benchmark and financial bulwark. The Fed has the heavily indebted United States.

Owning things

One thing is for certain, investors who own things will be OK. Inflation will be reflected in an increase in the value of things. Paper assets like money and stocks are another matter entirely. Money we know will be debased eventually and when it happens very quickly.

Share prices must reflect the profitability of the companies they represent. A world in recession will be a world of low profits and low share prices. That is most likely why easy money is starting to have less of an impact on stock markets. Investors are beginning to wake up and see it as a sign of bad times ahead, not a bed of roses.

It will be hard assets, things like real estate and precious metals that go up with and even beat inflation. Bonds will ultimately be a disaster and stock markets will likely collapse before them. Paper money will fare worst of all and that includes bonds.

The ArabianMoney monthly investment newsletter continues this commentary with actionable investment ideas that cannot be published on this website for legal reasons (subscribe here). The time to sort out your personal investment portfolio is now and not when disaster strikes but only you can take this responsibility.

Both gold and silver prices jumped sharply after the statement with gold now well above $1,700 and silver $33 an ounce. Mr Sinclair sees this as a major indicator of the quantity of money printing to come which will send the prices of precious metals much higher.

Important day

He told KingWorldNews.com: ‘Today is an important day. There are many days we talk but this is a mile-marker. What the Fed did today is they turned on the light of what will be QE to infinity. Today the light went on with regards to the intentions of the Fed. They did that for very specific reasons, we have troubles people can’t see and this is one of the ways out.’

Mr Sinclair reckons that this message is not going to be lost on any person or institution currently holding cash. The devaluation and debasement of the US dollar is being explicitly targeted by the Fed and they are putting a date on it.

‘I think you are going to see a very significant change amongst investors, corporations and companies with extra capital and people of the mainstream,’ he said. ‘You’re going to find gold being accepted as a hedge against what’s going on by entities, that up to now, you would think would be the last ones to be buying gold. How about someone like General Electric?

GE gold?

‘I used GE as an example because the principal of GE is a major advisor to the government. That would be the most unlikely thing for GE to buy gold. But don’t count it out. You are going to see a lot of things this year you thought at one time impossible, becoming reality.’

Mr Sinclair’s predictions on the gold price have been consistently accurate with the rare exception of the 2008-9 price correction, although that too only proved to be a bump on the road to higher prices. He sees gold prices heading north of $5,000 an ounce.

(For the full radio interview click here)

The hottest rumor is that silver will double in price in the next six months. Certainly the interest in articles about silver on ArabianMoney suggests that investors are most curious about this asset class.

But watch out for the infamous volatility of silver and be prepared to be patient if a global stock market sell-off takes prices down before they go up. Still we have made silver our pick of the year for 2012 (click here).

Karachi Jewellers told ArabianMoney yesterday they are selling 600 to 700 of these $1,300 bars each month with a 4.1 per cent profit margin.

More profitable than gold

‘It is far more profitable to trade silver than gold where the margin is much smaller,’ said director Ejaz Ilyas in a video to be broadcast on this website tomorrow.

‘We get a lot of passing tourists who buy 1kg silver bars. I was born in Dubai and spent most of my professional life in London but business is better here now. Even a modest shop in this souk does well.’

Not far from the Old Gold Souk is the ultra-modern terminus for cruise liners. Almost a million passengers visited Dubai last year and many find their way to the famous Dubai gold souks where gold and silver are sold untaxed. The only country in Europe not to charge tax on silver is Estonia. Cruise ships also call in there too.

In the Old Gold Souk the customers come from all over the world. Chinese and Russian buyers are prominent though Arab buyers from the Gulf Cooperation Council countries are probably still the biggest spenders. This is the month of the famous Dubai Shopping Festival so the gold souks are particularly busy.

Mr Ilyas said he thought the price of silver would be $58-60 by September, a spectacular gain on the price of $32 an ounce on the day of our visit. His reasoning is that the shift from paper money to real assets will benefit silver more than gold.

‘Metal prices are always volatile,’ he cautioned. ‘However, you can see where people are putting their money now.’

Eurozone money printing

There is also a school of thought in the souk that reckons the outcome of the eurozone crisis will be more money printing by the ECB whatever happens to Greece, and that this will propel dollar-denominated silver and gold to much higher prices.

Of course there is always the liklihood of a short-term set back for silver in a big market sell-off but that has not stopped ArabianMoney making silver our top tip for 2012 (click here).

The shiniest of metals is off to a good start with the price up 13 per cent since the New Year, comfortably outperforming any other investment class.