-- Posted Thursday, 1 November 2007 | Digg This Article
| Source: GoldSeek.com
I am one of the few who believe that the “US dollar is starting to loose its World Reserve Currency Peg” which will be completed by 2010. Gold and no other currency can replace the US dollar as the world reserve currency. If one looks back in history, before the First World War, the US dollar was just another currency. After the First World War the US government formed a coalition with UK and tried to ensure that more and more global trade is billed in US dollar. This caught up even more after the Second World War and thereafter the US dollar syndrome began which has yet to erase. US has been the key driver for global growth and consumption from early 1960 till date. Therefore dependence on US dollar and US economy also increased the value of the US dollar. Crude oil, billed in US dollar further added to the clout of the greenback.
All this is about to change! Crude oil may not be billed in US dollar after 2010. There are appearing cracks in Opec and middle east coalition of nations over billing of crude oil in US dollars. How can long can US and it allies attack nations which bill crude oil away from US dollar. Iran, Nigeria, Venezuela are all on radar of US government as they try to bill crude oil in non US dollar form. More wars implies more US dollar bashing and greater value for gold.
SILVER
I am silver bull and am disappointed by silver performance after April, 2006. Silver fundamentally is the most bullish commodity due to its industrial use and use as jewellery. Silver is not preferred as an investment destination due to its volatile nature. Silver has the history of falling more than any other metal in a bearish market and at the same time it rises more than other metal when the bull run starts. Once the over-hype is over silver will rise and beat gold.
Is silver the right investment at the current levels
Two months to six months: I will invest in small quantities at the current levels and use any five percent dip to invest more. I do not expect silver rise more than twenty percent from the current levels under the best case scenario. Buy some February call options.
Six to twelve months: I do no expect silver to rise over thirty percent under the best case scenario. Crude oil and gold will give silver stiff competition. Hedge yourself by buying put options if silver rises over $1800.
Two years to three years: Great investment on any five percent to ten percent dip. Silver should give a return of atleast fifty percent. One should bifurcate between futures, options and exchange traded fund and physical buying. Do not keep all eggs in one basket.
(This is just an excerpt from the November monthly report, to receive a copy of the same please mail at sms@insigniaindia.com)
Disclaimer : Any opinions as to the commentary, market information, and future direction of prices of specific currencies, metals and commodities reflect the views of the individual analyst, In no event shall Insignia Consultants or its employees have any liability for any losses incurred in connection with any decision made, action or inaction taken by any party in reliance upon the information provided in this material; or in any delays, inaccuracies, errors in, or omissions of Information. Prepared By Chintan Karnani. Website www.insigniaconsultants.in
-- Posted Thursday, 1 November 2007 | Digg This Article | Source: GoldSeek.com
