Posted on 07 January 2013 with 3 comments from readers
Last Friday likely marked the end of the recent correction in silver and gold prices and there is nothing except blue sky from here. That was the conclusion of chartists like Clive Maund reading the technical signals (click here) from the price charts over the weekend.
From a more fundamental perspective last week was something of a bear raid on precious metals by the Fed and its bullion banking friends. False rumours about a wind-up of the QE program quickly put the wind up the weaker holders of gold.
The buyers were doubtless these same banks. This is actually what the great gold guru himself Jim Sinclair said would happen a month ago (click here). The bullion banks are repositioning their holdings ready for another leap in gold and silver prices, this time up and not down.
In a manipulated market this sort of thing happens all the time. However, the longer trend is still everyman’s friend.
The ETF’s or the exchange traded funds are quite common today. These funds, great post to read, track an index or could be tracking an asset or a commodity. These are traded on the stock exchange just like you would be trading shares. These funds have the backing of a physical holding of the stock or the commodity
Mr. Maund’s commentary correctly points out that abandoning QE would be like the captain of the Titantic spotting an iceberg and ordering the ship to sail straight into it. As ArabianMoney noted yesterday the global bond markets would immediately crash without QE.
Investing on the inevitable is generally a highly successful move. However, patience and perseverance are always needed to ride out the ups and downs of any financial market. Many fellow travellers drop out along the way. A few left last week and will bitterly regret it later.
Eventually gold and silver will arrive at their ultimate destination of very much higher prices. James Turk hazards $11,000 an ounce as the top for gold (click here). Silver has its $1,000 an ounce pundits. Markets do always tend to overshoot on the upside.
So New Year nerves aside what Friday last week really represented was probably the cheapest buying opportunity of this year. Put the technical charts and fundamentals together and the message is crystal clear. Gold and silver prices are about to take-off.
Gold and silver stocks most likely also hit rock bottom at the same time last week. The gains from here should be pretty spectacular.