Back from 'vacation'

Ok, you're probably wondering why there haven't been any posts while the market's done quite a wild ride. Well, i haven't been off spending the profits from selling at the peak (wish i did) nor have i been wallowing in losses of the past two months (of which there hasn't been any). And no, i haven't been on a vacation, though i've taken a vacation from keeping an eagle eye on the market.

Bad timing you say? Maybe, but then again maybe not. I guess the question i pose to you (and myself): Am i in the long or short term game? Yes, there was an amazing opportunity to cut huge a profit on strategic trades, especially in silver which is still 35% off it's peak. Gold though, is still relatively stable dropping no more than 15% off it's peak. That's still a 100% gain on both metals over the past three years!

Yes, i know there are those of you who bought silver at $45 and gold at $1900, and to be honest it will be a while before you see those numbers again. But it may not be that long. Underlying monitary fundimentals have been violently shaken, and are still eroding at alarming rates. Look at the Euro which doesn't have a solid leg to stand on (well, maybe a couple of solid legs with the strength of a toothpick). The dollar rallied as investered were spooked by falling commodity prices, product of a unsustainable rally. And that's all it was,.. a rally. The dollar's bound to fall again with it's unsustainable debt load.

So, what's next? Probably a more cautious rise to August price levels, perhaps as early as year end. Sure, there will be resistance in breaking that $1900 level, but what i'll be in doing is buying at today's low level and holding my positions. I figure the short term pain is worth the long term gain.

Storm before the calm?

London's burning... Rome's burning... well, Rome's not literally burning but figuratively it is. The US is smoldering after last week's fire (both with the falling DOW and discounted credit rating). How much of the worlds unrest, be it political or economic is effecting the gold rally? Hard to say, the euro economies certainly are driving investors to look at safe havens.

Which leads me to ask, do we have a instability bubble? When things settle down, will gold's price settle at a lower level? Certainly look for profit taking, but the downside may be minor in the wake of economic uncertainties..

Breaking the barrier

Many felt $1700 would be a strong barrier, though it cut through the resistance today like a hot knife through golden butter. Whether it stays there or not is no longer the critical issue, but once it's breached that resistance it won't have trouble returning to that level..

Look for some consolidation and profit taking, but looking at the shaky economic fundamentals, $2000 gold is well within reach this year.

seventeen

Seventeen hundred is well within grasp after gold settled solidly above $1600 last week. Rallying to $1677 with ease today was unexpected for some. But economic fundamentals, with the US AAA credit rating wavering and Italy faltering, it's a run to precious metals for most investors.

Blowing the roof..

Yes, we got a deal to raise the debt ceiling. Initial reaction in the markets was positive to the news, gold and silver dropped, though not by much with silver still flirting with $40 and Gold still solidly above $1600.

Obama may have succeeded in postponing the inevitable. With the US debt growing by the second, how much longer until they need to raise the debt ceiling again? Seems all that's left in this house of cards is to blow the roof off..

The pendulum has swung

Since my last post, the pendulum has swung.

Gold is now solidly above the $1600 mark, with silver holding steadily on to the $40 level. Again, the gold bears are in hiding with a downside unlikely, and the bulls are about to take charge.

Monetary crisis is deepening with the US facing a debt ceiling crisis and Europe struggling with it's continuing saga with the P.I.G.S. (Portugal, Italy, Greece and Spain). Rumblings in Asia are also discontenting, as some nations and many municipalities have increased debt levels to unsustainable levels. Are we about to see a monetary collapse of unprecedented proportions?

IMF magicians along with central banks are trying to concoct a miracle potion that may save the dollar from collapse, time will tell if the succeed. All fundamentals have eroded, so any fix would be temporary at best. How soon until we see triple digit silver and $5000 gold? It just may be sooner than we think...

The next move, up or down?

Ok, we've reached the $1600 mark i mentioned last week, and gold seems to be holding steady at this level. It's the psychological barrier, and resistance so many have talked about, yet the question is will profit taking start a trend downwards, or will monetary policies drive the value of gold up? In reality it's driving the value of paper currency down further...

The eurozone bandaid solutions are not enough to stabilize the debt crisis, and the US keeps printing greenbacks. Unless there's a drastic change in the monetary policies of these economic power(less) houses, we'll see a further 10-15% devaluation before the year is out. Translation: $1800 gold by year end.

In the meantime, Europe keeps patching, America keeps printing...

Let the rallys begin...

Gold has been teetering between the $1500-1550 resistance range for a while, undecided whether to turn in favor of the bulls or the bears. It this tug of war, it seems the bulls have pulled the gold rope over the line, breaking the resistance and rallying through $1570 yesterday. It seems $1600 is a near term certainty, the question remains how further could gold rally?

Take into consideration the Eurozone is looking less stable and the Fed's hinting at QE3, will we see $1800 gold by year end? Not sure how far the bulls can pull the gold rope, though they certainly have the stronger arm at the moment..

Greece, Portugal crisis - what's the future hold?

The Euro has been fighting off a crisis for the past year, starting with greece, ireland, now the financial portugal and greece again has come back wit a vengeance. How ill this effect commodity prices?

It all depends on what currency you are relating to. Of course, there is pressure for the euro to go down in relation to Gold as well as the dollar, but will stronger dollar translate into a soft metals market?

Fundimentals are the key. With QE3 on the books (though they may not call it that) and inflationary pressures in tackt, the market should hold it's long term bull trend regarding metals. However a technical resistance has been hit at $1540 gold and $38 silver, there may be still a 5-10% pullback possible, especially for silver. One should be looking at hold and buy strategies, looking for opportune dips to buy.

To coin a currency = Inflation

Inflationary pressures have gripped the planet lately, with commodity prices rising at unprecedented levels. True, there has been some corrections in the markets, but the trend has not relented. With central banks printing money at will, the shaky foundation of stable economics has eroded.

But there's another inflationary factor i've never really noticed before. Coins. What kind of coins you ask? Nickles, quarters, euro coins and dollar coins in some countries. So you ask, what do coins have to do with inflation?

Strange as it seems, paper money has the illusion of having more value in our pockets (though as a commodity, paper is worth less than the metal in coins). We are less inclined to spend our bills than our change. Coins are given away more easily.

This theory is not based on any scientific research or statistics, but what i have personally noticed in economies where paper currency has been replaced by coin of similar face value. Canada replaced the $1 and $2 notes with coins years ago, many other countries similarly. Europe, the latest to replace a slew of paper currency notes with 1 and 2 euro coins, with Estonia joining just months ago.

Despite promises of 'no price increase with euro', prices have increased substantially for most small ticket items. How much of the increase can be attributed to the new currency and how much to commodity related pressures is arguable. One thing most people have noticed is that money, especially the coins disappear much quicker than it did with the old currency. Also credit and debit card use is up dramatically, a seamless painless way to pay, until the bill comes.

The US is one of the few developed economies that still has it's base unit currency as a paper note. How much that helps in staving off addition inflation, who knows? But i'll bet you my last dollar note, that if and when the US changes to a dollar coin, prices will hike as it has in every other coined currency.

Base for the next rally?

There's been quite a bit of market correction (or manipulation) in precious metals the past month. While gold was down less than 10%, silver's extreeme volatility took many traders out of the game, while some made nice profits. For the long term investor gold seems to be the safer haven, though silver shouldn't be written off yet...

What we've seen in the markets is the settling of a new base, or bottom as you will. Fundamentals point to rise in gold, which means silver certainly won't be left behind. With Gold reaching new highs and breaking $1450, silver's volatility should decrease and set it up for a new bull run. But if gold doesn't break 1450 and retreats, silver will probably take another hit, dropping to the low thirties and stabilize there until the next bull run.

So the question is not weather to hold, but when to buy.

Crash and burn? or manipulation?

This year has been quite a roller coaster in the precious metals, especially in silver market. With Silver peaking close to $50 just two weeks ago, we saw 1/3 of it's value wiped out in a week. Now many would suggest that even if gold was not in a bubble, silver certainly was. Pundits have argued that silver was undervalued all along, but to see a 50% increase in just 3 months seems to suggest it became somewhat of a bubble.

During this time of the silver rush, gold seemed to hold it's own. No rally, but steady increases at least until yesterday. Among others, Warren Buffet dumped much of his gold holdings, which makes me wonder if it's time to abandon the yellow metal?

To put things into perspective, yes there has been a sell off, but gold's been holding at little more than 3-5% off it's peak while silver took a wallop of 30% last week. Even with stronger economic indicators, falling energy prices and a rallying dollar, gold is still holding it's own. Even if Buffet's selling, is it still a good time to position yourself for another bull run on metals... ?

Investing in commodities is risky at any level, yet gold has held it's value though thick and thin. Silver by nature is more volatile, but positioning yourself for a buy on silver at the right price may give another nice rally before the year's out. But what's the right price?

Looking at technical charts it seems that price may be a bit below $30, but who can say what other factors may play into all this. It's been bobbing in the $33-35 range for the last few days. Silver can be manipulated easily, and the big boys probably have more insight on when to buy.

So what was Buffet's strategy was with selling gold yesterday? Perhaps he's repositioning himself for the next rally. Will it be silver or perhaps another commodity? Only time will tell. But even with the sell offs, gold still seems to be the safest haven as it's been holding it's own.

Gold's up

Time to sell or buy?

On my previous posting, i stated that gold prices are in a temporary summer retreat. Some analysist claim that this is the start of a downward trend. While there currently may be some downward pressure from the markets, I feel this is more of a correction than a trend. The fact is economic uncertainty and monitary pressures should continue to apply upward pressure on Gold and Silver.

Trading any commodity is a risky venture. A strategy of selling a commodity to re-buy at a lower price later has caused me losses more often than not. Short term trading strategies rarely bring the same returns of long term investements, at least not for amatures.

If you view gold as a vehicle of securing your future, dips in the market should be used as opportunities to increase your holdings rather than playing the market for short term gain. Selling at the wrong time means loosing your investment and re-buying will certainly cost more. If you really enjoy playing the market for short term gain, there are plenty of better gain opportunities in stock market, of course with greater loss risks as well.

Gold is a haven of security. Until economic and monitary uncertainty has been resolved, Gold will retain and increase it's value, remaining one of the most secure investment vehicles around.

Temporary retreat

Summer has always been a slow season, Everyone vacationing, enjoying the warm weather. Summer always takes pressure off the markets, be it stocks, commodities, or precious metals. This summer of 2010 may be the last window of opportunity to invest in Gold and Silver, as September may bring the second phase of the great Gold rally.

to be continued...

The Silver Lining

Investing in Gold, has been one of the most sound investments thoughout time. But Gold is not the only precious metal with secure value. Silver has been used as a lower currency denomination thoughout history. Silver coins, pieces of silver have been common trade instruments for centuries. The fact that 200 years ago Jesus was betrayed (sold out) for 30 pieces of silver, indicates this metal does have significant value.

But the value of Silver has lost some of it's luster in the last century. It has become more commonly used in industrial practices, although the demand for investment silver has been increasing quite strongly. Many analysists believe silver is currently undervalued in it's relationship with Gold, and with limited supply may be a more profitable investment in the longer run.

Window of Opportunity

Gold prices have retreated temporarily. Now is your chance to buy.

Sinking currencies

Is joining the Eurozone like boarding the sinking Titanic? An interesting article about Estonia's plan to give up it's own currency for the Euro...

http://www.dw-world.de/dw/article/0,,5670009,00.html

Has the old top become the new bottom?

The gold price has been quite volitile the past few weeks. Hitting the $1000 barrier seemed to be the top of he gold run in the past two years, this year it has broken $1200 more than once. In the past months it has not fallen below $1000, preferring to bounce in the $1100-1250 range. Have we entered a new bull run, or will we see the price remain stable in this range for the next year?

Certainly the Greek default an EURO 'crisis' is the main motivator behind the latest jump over $1200. In euro terms gold's price has actually jumped close to 50% over the past year, as currency traders are looking for safer havens. Those unconvinced of Gold are returning to the US dollar causing a small bull run there too.

But how long can this last? The fact of the matter is, the US debt situation is no better than Greece's. It's just a matter of time, when the debt will be called and the US will default. Will investors run back to the EURO then? Or perhaps the British pound or Japanese Yen? All currencies have prooven themselves to be unstable at one time or another, and it seems that all continents debt crisis' are about to converge...

Where is the safe haven then? It seems the stage is set for the old currency of Gold to make a comeback again.

NIA video: Economic Meltup

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