Gold And Silver Tell A Clear Story

Thursday, March 30, 2006

Regular readers will have noticed that the frequency of my postings has become less regular this year. This is a result of browsing the archive and finding out that I have covered every major economic theme that concerns the ongoing redistribution of wealth. Having made clear my preference for precious metals, crude oil and markets like India I now find myself in the position where things are just about to develop as I have been forectasting it for a while now.
Looking at the string of deteriorating US and EU economic indicators which are best summarized in the growing current account deficits in the West and an unprecedented accumulation of assets in the East there is nothing that can change my position.
As long as the current occupators of the White House do not change their aggressive policy against the rest of the world for the fear to run out of oil there will be attempts to counteract against American interests. It will not go on forever that the USA can borrow the money to wage resource wars all over the world. The major consumer of all commodities will have to come to terms with the fact that it has to bid among other giants for the resources it needs.
Seeing all this unfolding I guess it is best to lean back in the armchair and remain patient, being long precious metals.
Gold and silver, for millennia the best indicator for acual political uncertainty, tell a very clear story: The world is up for major changes and the dependence on crude oil for energy and industrial purposes leaves few options for all oil importers than to face higher commodity bills.
It would be interesting to peep into the minds of the Arab world. The attitude to gold as a safe store of value is probably a lot more prevalent thant in the West. Recent downturns on the Arab bourses and money for nothing from high oil prices may be one reason for the advances in gold.
Silver currently looks mainly driven by the expectation of the new Barclay's silver ETF, but the rally from $9 to $11.70 leaves me speechless. Readers of precious metals websites will certainly have read about the speculation that there is actually far less silver above ground than gold and come up with figures that tend to fizzle out at the billion ounce mark. If these reports turn out to be true see silver rocketing. This could become the biggest bull market in history. In my opinion silver below $30 will be seen as cheap in a decade from now.
Platinum is worth a look too. The metal reached a new record today and political uncertainties in Zimbabwe may lead to temporary shortages if despot Robert Mugabe proceeds with his expropriation plans.
Oh, and palladium... I should have bought it when one of the major metals gurus compared observing palladium with watching paint dry. That was at $190. Last price: $342.


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