No bubble in gold says Marc Faber as the price hits a new all-time high
Posted on 06 September 2011 with 4 comments from readers
Just weeks after a dramatic $200 correction the gold price surged past $1,921 today to a new all-time high, and speaking to Bloomberg from his home in Chang Mai in Thailand legendary investor Dr. Marc Faber said gold is not in a bubble just yet.
‘I don’t think that gold is in a bubble, he said. ‘When you buy gold, it’s an insurance against systematic failure and problems in the financial markets.’
Red alert
Looking around the markets this morning the warnings of an impending global financial crisis are written in letters ten feet high, and not surprisingly the banking sector is being heavily shorted and gold and silver prices are up, with gold hitting a new all-time high.
Indeed, as ArabianMoney pointed out when the gold price corrected by $200 and the silver price by 38 per cent in April (click here), such price movements actually strengthen the price trend. Pull backs are consistent with very much higher price levels and not a short-term blow-off or price spike.
However, what is very difficult to say is whether there will be a really big correction of the sort we saw in the autumn of 2008 going into 2009. Then silver prices more than halved and gold by a third.
It was a great bull market buying opportunity but that was little compensation if you had just bought precious metals. That is when our Saudi friends bought $3.5 billion worth of bullion (click here).
ArabianMoney told readers then to hold on and that was the right course of action (click here). It has also been very difficult to judge the peaks and troughs since then, and many professional traders have gotten this wrong and lost heavily. Just buying and holding worked best for all but the cleverest or luckiest traders.
Buying now
So should you stick with gold and silver if you own it, or buy more now if you do not? We certainly think sticking with the physical metals makes sense if you have them. Buying at an all-time high is a much harder call.
But we think silver is the better buy at this point, though it will almost certainly repeat the volatility of April again and several more times on its way to far higher prices. Buy as much as you can stomach with this volatility and sit tight!
The next edition of the ArabianMoney newsletter will discuss how to achieve the best performance from precious metal related investments, sign up now to get this when it comes out (subscribe here).
4 Comments posted by readers:
“Buy as much [silver] as you can stomach with this volatility and sit tight!”
Amen to that, Peter!
What is very obvious this week is that someone big is pushing down Silver prices. Silver is being held back big time. There is an invisible hand involved behind the scenes repressing Silver prices.
@ Andy:
No doubt, what you’ve stated is correct; we’ve all seen it BIG TIME in 2011.
But in reality, those that are doing this heavy manipulation are well known. For years, it used to be the US government/FED and their minions JPM/GS/HSBC/CBOT/CME/CFTC/ etc etc. cartel with strong participation from the BOE/LBME and DB.
As more fiat currencies were printed, the world’s financial problems didn’t get fixed; they got worse. Now, when certain big financial events occur (e.g. the recent Swiss decision to peg their currency to the Euro, and print their fiat currency infinitely), central banks around the world act in unison to suppress the gold and silver prices.
These acts by central banks and their associated minions are rehearsed, well-coordinated and well-timed. There’s nothing invisible about it. For an interesting read on this topic, go here to read what Ben Davies (CEO at Hinde Capital) has to say about it:
http://www.gata.org/node/10393
and here:
http://www.zerohedge.com/news/gold-falls-2-minutes-asian-trade-%E2%80%93-global-currency-wars-resume-and-markets-digest-german-decisi
@ Andy:
Here’s a great commentary by Ted Butler, arguably the best and most informed silver analyst in the world. He analyzes the CFTC reports every day, and in this commentary, he explains the reasons why gold (and esp. silver) will continue to have volatility in the highly manipulative COMEX (aka CRIMEX) commodities markets.
http://news.silverseek.com/SilverSeek/1315318111.php