Have Gold & Silver Started to Fall in Price?
The current thought in the US and most of the world is that the debt crisis is abating (as we said so long ago), and in the early part of 2011, the price of gold, silver and metals has slipped a bit.
January was not a good month for gold. February looks similar.
Overwhelmingly positive data (consumer credit and spending) in the US has increased sentiment. It has blinded investors to the realities surrounding the dire fiscal situation in the United States. While the economy is showing signs of positive growth, at the same time the Central Bank is begging Congress to raise the debt ceiling.
It is important to remember what we have written so many times. The stock market is never, and will never be a fairly valued place. The market rises and falls on the hysteria of the moment. It is like a school of fish, chasing the leader.
The sentiment and direction of the market changes instantly. It rises and falls based on the hysteria of the moment.
Stocks Never Always Go in One Direction
If you accept that nothing ever goes in one direction constantly, you can accept that when there is a temporary pullback, it is the time to jump in. Gold, silver and metals have pulled back for a few days. Buy Now.
The Standard & Poor’s GSCI Precious Metals Index dropped 6.5 percent in January, the most for the month since 1991. Gold itself retreated 6.2 percent and silver 9.3 percent on the month.
This period could very well be a significant pullback before gold makes its ascent to $1,500 an ounce or greater.
Gold
Gold is no stranger to monthly pullbacks and January’s drop is relatively small given the dramatic continued rise in recent years. Over the past decade, gold has experienced 4 monthly slumps larger than January’s 6.2% pullback. In March of 2008 when gold fell 34% through the Spring and Summer, only to rally almost 50% from November through to February of 2009. Gold will see new highs and the precious metal bull market is alive and well.
Silver
Silver did the same. It lost 57% of its value only to rally 73% in the following months during the Winter of ’08 through to ’09. Precious metals are not in a bubble, contrary to what the media outlets try and tell you.
The only clearly identifiable bubble is the debt bubble of the United States which is accelerating at a dangerous pace. The National Debt in the US is increasing more than $4 billion per day.
We Are Not Gold Bugs. We do not believe the world will collapse.
We do believe that, as has always occurred, there are trends in investing, and the current trend, for many reasons discussed previously, is that gold, silver and metals are under priced and will rise in value.
