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Correction of gold and silver prices. What now?

Alexander Aardema — Tue, 22 Dec 2009 17:04:25 +0000

Since last week prices of both silver and gold went into a sharp correction. And that is what it is, a correction!

This might be the last change to buy in on physical gold and silver and mining stock at reasonable prices. This correction is a healthy step in the way up. The majority of investors are interpeting the GDP data of the U.S.A totaly wrong. We see the first signs of inflation in these numbers. And inflation should mean higher prices for gold and silver. The stock markets are experiencing a classic end-of-year rally, and a large correction into the new year is inevitable.

This week we sold all our shares of International Royalty Company (AMEX:ROY | IRC:TO) @ US$ 7,15 we bought IRC in June (before our website was launched) at a price of $ 3,55 a very nice profit so we think! IRC was the very first company we invested in. You can look into our entire portfolio at http://cashinfo.org/about/

We wired some of our profits to our gold account at BullionVault.com and will buy gold when once the transfer is complete. Please click our affiliate banner below to find out how this company works by receiving a free gram of gold to practice with! Note: If you sign up via the banner below CashInfo.org will earn commission if you fund your account and start trading.

There are some interesting companies we are following at the moment. When we decide to invest in one of these companies we will let you know immediately on this website!

Overview of the current market for gold and silver. Bull market continues!

Alexander Aardema — Thu, 12 Nov 2009 13:18:50 +0000

Today gold rose to a new all time high (again). The up-trend in gold is going much faster than we expected, so actually we were wrong. Though, you won’t hear us complaining of course. The brilliant price of $ 1122 was reached shortly. The temporary downturn we predicted did happen, just not as far as we expected, from $ 1050 in went down to $ 1030. Why did gold go up so far? One side is the downturn the dollar has taken. So your gold only appears to have gone up for a part. The second contribution we have to thank the central bank of India for. They bought the gold the IMF was selling, we wrote about this in a previous post. So after 50 years of gold selling by central banks we now see them buying again (in an other part of the world though). Both these factors had the effect that investors started buying again, resulting in an even bigger gain. We expect the gold price to remain stable for about 1 or 2 months or decline slightly before yet another rise. When we look at the technical chart of gold, and the expectation that both banks and investors will keep buying, we set the new price target for January 2010 at $ 1150.

What about silver? There we did not see such a large gain. This is the direct result of the industrial demand for silver. For a rising silver price we have to count on investors, they still seem to be focused on gold at this moment however. Once they finally realise that silver is undervalued big time, we might see the price of silver explode. We expect that the price will be around the $ 22 level at the end of this year. The big correction in the silver price, that we keep waiting on, should result in a real price explosion . We predict this will take place in beginning of next year. A price of $ 50 or even $ 60 is not unthinkable. Read our previous post on silver to learn why this will happen.

Conclusion, for both gold and silver we remain bullish. The last chance to buy at a reasonable price is now! The biggest “discount” however, is to be found in silver.

Why silver is undervalued at the moment. The gold/silver ratio explained.

Alexander Aardema — Tue, 06 Oct 2009 17:20:02 +0000

Absolutely bullish on gold and silver!
The gold price is over the $ 1000 mark (again) and while I’m writing this post we are experiencing a very large upward spike!
I think that gold will rise further till at least the end of the year, than it should have reached the $ 1080 /1090 mark.
Than two things can happen: 1. a drop back to the $ 1000 mark again or 2. a price explosion, where gold can easily go to $ 1500 or even $ 2000
Silver is being highly undervalued, today the gold/silver ratio is about 70, before 2008 the ratio was in the 40-50 range. Historically the ratio is about 16, and that number makes much more sense than the ratio’s we see nowadays.

There is about 16 times as much silver in the ground as there is gold. Then why did we loose this ratio? This can be explained by silver loosing its monetary status to gold in the 19th century. During the 1970’s the value of silver was once again proven because the inflation was very high. The price went from a few dollars to $ 50 per ounce. If we correct that price to inflation, silver should cost $ 150 per ounce today! It should be noted that there was an attempt to corner the silver market by the Hunt brothers which caused the price to sky-rocket. The plan failed on Thursday 27 March 1980, this day became known as Silver Thursday. Also the leverage of the silver price to gold had a very negative effect during the 1980’s. In 1992 silver hit a historical low of $ 4,73 per ounce. Not long after that Warren Buffett bought a large quantity of silver. You can find some interesting charts here.

Many investors have considered the industrial aspects of silver as negative. What they forget though, is that silver is being consumed, and gold isn’t. Every year new applications for silver are being discovered. For instance, there is probably silver in the screen you are looking at right now!

The money presses are running wild in both the US and in Europe. Normally money is created by central banks in order to keep track with economic growth. We can’t really say the economy has seen much growth lately. Inflation is inevitable, so the chances of silver prices going berserk again is very plausible. Have a look at a very nice chart I found. The chart shows the silver price over a period of 600 years, corrected by inflation and the gold/silver ratio. (chart from 1998)

Click to enlarge

G-20 Summit starting today, new Bretton Woods?

Alexander Aardema — Thu, 24 Sep 2009 19:06:44 +0000

Today the G-20 summit in Pittsburgh will commence. Many world leaders are now convinced that the dollar should be replaced by a new monetary standard, we might be on the brink of a new Bretton Woods. In November 2008 Gordon Brown and Nicolas Sarkozy were the first to publicly state that the current system is out-of-date and that a new world monetary standard is needed. Gordon Brown stated that a new Bretton Woods Conference should take place. Article in the Times. The IMF has posted an interesting article on its website, preparing the world for a new conference. Since many renowned economist are calling for a new Bretton Woods like conference we can only hope that today’s world leaders are brave enough to show leadership and take action.

But how should this new system look like?

For many reasons gold on its own is not likely to return to its historical importance. It is most likely that a new currency is created where it’s value is measured by a basket of the most important currency’s, oil, gold and other commodities. This idea is not that new, in fact John Maynard Keynes called for it in the Bretton Woods conference. The name of the proposed currency was the Bancor. The U.S. government was so powerfull that it could push forward their proposal of fixing the gold price to the US dollar, so this plan eventually won. This system worked till 1971, after that the costs of the Vietnam War became so great that the Fed had to print so much money that the ratio could not longer be sustained. In the meanwhile European countries like France started demanding gold instead of the dollar, and shiploads were being pulled from Ford Knox. The US government was forced to let the fixed gold price go, and also stop the ban on gold ownership for US citizens. From 1972 till 1980 the price of gold exploded. If we correct the gold price of 1980 with inflation the price was $ 2000 an ounce in today’s dollars.

We will follow the G-20 summit with great interest and hope that the leaders will show leadership and vision. Will they finally decide that a new Bretton Woods should take place, or are they even more decisive and let Pittsburgh become the new Bretton Woods.

IMF going to sell of gold, will China buy it?

Alexander Aardema — Mon, 21 Sep 2009 23:45:00 +0000

Today the IMF announced that it will sell off one-eighth of the agency’s gold reserves, without disrupting the gold market. Both this report and a sharp rise of the US dollar made gold drop below the $ 1000 mark again. The price picked up again after it became clear that China is considering to buy it!

What really amazed me was the fact that the gold price did not drop below the $ 950 mark after the first report. 403 Tons of gold is a hell of a lot of gold! The news that China jumped in within hours did not surprise me at all. The Chinese really want to get rid of their soon to be worthless dollars don’t they?

Article from mineweb

China buying

Bullish on gold and silver?

Alexander Aardema — Wed, 16 Sep 2009 16:46:11 +0000

Why are prices of gold and silver rising?

Will it crash or go much higher from this point?

Fear of inflation is rising, many investors are looking for alternatives for the greenback.

We at cashinfo.org think the Chinese are mainly responsible for the recent rally.

The Chinese government is urging their citizens to buy gold and silver bullions, this in a bold move, considering that only a few years ago its citizens were prohibited from owning gold or silver.

At the Hong Kong airport a new depository has been build, and the government has started moving its gold from London to Hong Kong.

Now there are even rumours about that China is about to ban all gold and silver exports from the country.

Read this article about China and gold

Another article about China and gold

Please let us know your thoughts about gold and silver at our brand new blog !