Tuesday, February 28, 2012

Record movement in gold and silver is coming soon--By Shan Saeed

Yes, that is true. Gold and silver are about to hit new highs in 2012. Gold will touch $2000/oz and Silver will touch $57 or more in 2012. Getting insurance of your wealth is a good strategy and by buying gold and silver you will achieve that along with your peace of mind of not losing your precious wealth. So, where Gold and Silver are heading in 2012. Lets analyse this strategically.

With gold nearly $1,780/oz and silver at $36/oz, the fact that silver is not pulling back is an indication of how strong that market is right now. This is a great start to the week for the precious metals. This is the kind of strength to make sure both gold and silver follow through in the next few trading days to confirm the big gains from last week where gold climbed 2.9%, while silver soared 6.4%. It is remarkable to see both metals hold their gains with no profit taking. Clearly, traders see something big is about to happen, and so do I.

In this regard, I have mentioned several times my expectation that once resistance at $35 is taken out, silver will climb to $57-$70 in 3 to 6 months. I still expect that outcome, but of course, only time will tell. I thought it might be tough going for silver in the $35-$36 area, but maybe not based on the strength we are witnessing today.

I expect the silver price will begin to accelerate to the upside once $36 is hurdled. In many ways silver is positioned today like it was back in the summer of 2010. I have informed my valued investors for the last 2-years why I am bullish on Silver and its industrial utilization. Investors will remember the events from back then and my bullish views about silver. I feel the same way today.

I have written in my blog many times about the relationship between oil and gold, which was up 2.9% last week. Oil jumped a remarkable 6.3%. With all the money printing going on in central banks around the world, not to even mention the growing tensions in the Middle East, oil looks ready to test its record highs some time this year....Governments are broke, banks are insolvent, investors are looking for real assets to take position to have sustainable profits going forward. This is why it is so important to be outside of the banking system by having a portion of your assets in physical gold and silver.

It is also quite possible that gold will outperform oil by the end of the year. But the bottom line is the wind is at the back of the bulls in both the gold and oil markets. I follow this like on a daily basis, but I look at it differently. I look at the price of crude oil in terms of gold and since the beginning of 2012 gold has been outperforming crude oil. This relationship between oil and gold goes back decades. Today an ounce of gold buys basically the same amount of crude oil it did 60 years ago.

But you do get some fluctuations in this relationship and right now I expect the purchasing power of gold to increase. What I am saying is that an ounce of gold at the end of the year will buy more oil than it does today.

You always want to be in harmony with the major trend in prices. As they say time and again, never fight the market. So here's the point I am making, Events so far this year have been extraordinary. The markets are signalling it. In reality, events are spinning out of control. Financial markets will be very messy and turbulent in 2012. There will be lot of headwinds to confront by the policy makers in the noisy market.

Despite this new bailout scheme being foisted on Greece, the situation there continues to spiral out of control, which is one of the factors causing confidence in the safety of European banks to continue eroding.

Surprisingly, over the weekend, the Telegraph in London reported comments by George Osborne, the British Chancellor, who said, ‘The British Government has run out of money because all the money was spent in the good years.’ Finally, a political leader came out and said what everyone has been ignoring. While I applaud Osborne for telling the truth, the frightening reality and what everyone has been ignoring is governments around the world are broke. UK budget deficit will rise and economy might go into recession by Q2-2012. QE has already hit the British economy. Ben Bernanke is the pioneer of Quantitative Easing

Disclaimer: This is just a research piece and not an investment advice. All financial transactions carry a RISK

No comments:

Post a Comment