Gold and silver to sell-off now and then power ahead
Posted on 08 November 2010 with 2 comments from readers
Short-term the gold market is looking ready for a correction and the dollar rally that accompanies this week’s correction in global share prices ought to achieve that, but this will only be a dip on the long-run bull market.
That gold’s advance is far from done is evident from the charts. There is nothing to suggest the parabolic spike of an unsustainable trend, see this chart taken from the excellent website clivemaund.com:
Compare that with the dot-com boom and bust seen in the Nasdaq, and note the price spike at the end. We also saw this with oil in the summer of 2008, for a spike usually marks the end of a bull market:
However, referring to the first chart it is clear a pull-back to perhaps $1,250 is perfectly possible without breaking the upward trend. This would be an excellent moment to buy gold, silver or the precious metal stocks.
Best advice
The ArabianMoney investment newsletter (click here) will be considering how to position portfolios to best take advantage of a renewed rise in the gold market next month. There is no doubt that with QE2 the Fed has given gold a new lease of life. The danger is only very short-term.
For gold is the money supply that cannot be inflated while the dollar is clearly a currency that can and will be printed en masse. As Clive Maund points out today in his analysis other nations are bound to follow or get left out, and that leaves gold and silver as the currencies of choice.
ArabianMoney prefers silver to gold for long-term appreciation. But short-term the usual higher volatility of silver will give it a bigger sell off now than gold. That will make it a better bargain that gold again ready for the next leg up.
2 Comments posted by readers:
I am not sure about gold. It goes from one hole in the ground to another.
Among the many problems of the world is the continuing global financial chaos, as the US continues its path of fiscal and monetary insanity, while it shows complete disregard for the significant harm their policies are doing to the economies of other countries.
Holders of gold (and silver) should be happy that the FED’s Bernanke is certifiably insane, because QE2 is good for precious metals investing, and QE3 will be even better!
@tiger 88:
You’ve obviously been listening to Warren Buffett’s baseless counter-arguments against gold. What you should be thinking about is why folks like Buffett and George Soros would denigrate precious metals investing.
In Soros’ case, he openly disparages it, while secretly buying as much physical gold as he can, before the masses start buying it.
In Buffett’s case, the truth is that the net worth of his vast empire is greatly diminished if the masses take their money out of overpriced stocks and start buying something that can’t be printed or debased.
Instead, listen carefully to wealthy guys like Jim Rogers, Marc Faber, Eric Sprott, Doug Casey, etc. all of whom have more honorable intentions. These billionaires all realize that gold and silver are in a long term bull market. They practice what they preach and expose the truth about corrupt, debt-based economies and fiat currencies, rather than to consistently deceive and manipulate the general public.