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Posts Tagged ‘market’

Update on the gold and silver market. Bumpy road ahead, but much upward potential.

Sorry I haven’t posted anything for such a long time, I am very glad I am blogging again! After almost six months yet again another all-time high has been reached in the price of gold. Last week there was is slight pull-back, but today we see bargain hunting again.  I expect the gold price to remain in the $1160 – $1250 range for the coming months. This is not what happens in ‘normal’ years, than there always is a drop of the gold price in the summertime, so not this year!  The biggest development in the last moths has been the fact that the gold price now moves independently from the dollar index. I visit www.kitco.com on a daily basis. The Kitco Gold Index gives the investor a better view of the price development. We probably will have to wait till September before we will see a steady price of about $ 1300 However, there may also be upward as well as downward spikes these coming months. We still advise to buy gold whenever is falls below $1180 I myself don’t do trackers or Forex trading, but this volatile market is sure making them interesting tools for the more aggressive trader.

Some people say we are in a bubble

We’re not! When your taxi driver or shoe polisher advises you to buy gold, than we are in a bubble. You do see the financial media have picked up the marked trend, and are following it closely.  This merely was the first step towards bubble forming. This will end in a bubble, that’s for sure as well. But with ever diminishing gold and silver deposits on this earth make sure a firm bottom for prices has been formed now.  When you correct the 1980 prices of gold and silver for inflation, the all time gold price would be around $6000 and that of silver about $120 when we reach these ranges, and we will, we can talk about a bubble again.

What about the silver price?

The price explosion I discussed in the previous post has not happened, yet. For this event we probably have to wait for September as well. With rising gold prices the material becomes more and more ‘out of reach’ for some small investors and the general public.  This will result is a correction of the gold/silver ration to its historical value of about 15. If we apply this ratio to today’s gold price of $1200 silver should cost $80 per ounce. One reason for prices not to have exploded yet is the price manipulation of this market.  You can read some very interesting facts about this manipulation via this link. For information about manipulation of the gold price please visit www.gata.org

Buy gold and silver! Bullion, coins, nuggets, and Silver Wheaton (SLW)

The European dept crisis will continue at least for two  years. The so much discussed PIIGS countries will contribute to a further decline of the Euro. Now about them PIIGS, this surely must be the best marketing hoax since the Blair Witch Project.  The people who made up this term confidently left out Great Britain and the United States. Those two countries have issues with their money base and depts. far greater than the PIGGS counties. Therefore physical gold and silver will give the best ‘insurance’ for the longer term. We managed to pick up some more shares of Silver Wheaton (SLW) at a price of $14.95 We have put in another buy order at a price of $17.50 We will monitor the price of this stock closely. Established in 2004, Silver Wheaton has quickly positioned itself as the largest metals streaming company in the world. The company currently has thirteen silver purchase agreements and two precious metals agreements where, in exchange for an upfront payment, it has the right to purchase all or a portion of the silver production, at a low fixed cost, from high-quality mines located in politically stable regions.

Forecast 2010 production, based upon the company’s current agreements, is 22.2 million ounces of silver and 20,000 ounces of gold, for total production of 23.5 million silver equivalent ounces. By 2013, annual production is anticipated to increase significantly to approximately 38 million ounces of silver and 59,000 ounces of gold, for total production of over 40 million silver equivalent ounces. No ongoing capital expenditures are required to generate this growth and Silver Wheaton does not hedge its silver production.

Silver Wheaton’s industry-leading growth profile is driven by a portfolio of world-class assets, including silver streams on Goldcorp’s Peñasquito mine in Mexico and Barrick’s Pascua-Lama project straddling the border of Chile and Argentina. The company’s unique business model creates significant shareholder value by providing considerable leverage to increases in the silver price while reducing the downside risks faced by traditional mining companies. Silver Wheaton has an experienced management team with a strong track record of success and is well positioned for further growth.

For more information on silver streaming and Silver Wheaton’s silver stream agreements, please click here.

Own physical silver and gold? Visit BullionVault via our link. Note: CashInfo.org will earn commission if you use this link to sign on and trade. You can also visit your local stamps and coinage shop if you want to keep your gold and silver close to you, and store it safely at home.

Development of the Kitco Gold Index (KGX):

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

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.