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Is It safe to Invest in Gold and Silver at current prices for the long term?



By: Chintan Karnani, Insignia Consultants


-- Posted Monday, 12 September 2011 | | Disqus

GOLD

Global economic uncertainty and the break down in treasuries are the only reason for gold to rise. This resulted in more and more investment demand flocking gold. Gold will fall as and when there is stabilization in the global economy and investors find secure alternate investments. But the US dollar collapse story has begun and more and more central bankers have been net buyers of gold and have been increasing their gold reserves secretly.

Even if gold prices crash in the coming months I do not see gold falling below this year’s low of $1310 under any circumstances. Intra day volatility has been high and has attracted a lot of day traders and particularly Indian housewives who have now started trading in gold. This is the maturing of the gold market but it also suggests that the current price rise is purely a short term speculative play. I am only concerned over the pace of the rise of gold prices and not the rise. Very high intra day volatility suggests that gold now has become a common man’s casino. This casino should burst in the first quarter of 2012.

IS IT SAFE TO INVEST IN GOLD FOR THE LONG TERM AT CURRENT PRICES?

I have been asked this question day in and day out? Gold is great long term investment even at $1850 if I compare it some of the bad investments that I made by investing in banking stocks and they crashed like a pack of cards. There are a lot of stocks that have fallen more than fifty percent over the past few months. Gold will not fall by fifty percent over the coming years. The gold price will not fall to $1000 with every possibility of $3300+ in the next fiver years. Long term, gold is still a good bet to invest even at $1850. Short term investment I did better to wait and invest around $1700 and below. But my preference of investing in physical gold will always persist viz-a-viz ETF and futures.

SPOT SILVER

The Technical picture

I have been an eternal silver bull and will remain a silver bull. Silver has been consolidating in the $40.00-$43.50 range and will break free from this range very soon. (A) Failure to break $43.50 this week will result in a fall to $39.60 and $36.80. (B)  While a break of $43.50 will pave the way for $48.80 and $55.22. (C) In the long term as long as $31.60 holds downside risk will be limited with every possibility of $72.30 (long term is two years).

Fundamentals

If the global economy slows down then silver will fall to $37.00 and $32.00. At the moment there is mild confirmation of a slowdown. If and when there is a confirmed slowdown then silver will fall and then rise. Long term fundamental uses makes me believe that physical silver is the best investment and even better than gold.

CAN I INVEST IN SILVER FOR THE LONG TERM?

I will give the answer in an indirect form. My client in India who is a jeweler has a baby girl of eight years. I have asked him to buy 30kgs of physical silver for marriage and another 30kgs for higher education and that the silver price appreciation over the coming years will cover his kid’s marriage expenses and education expenses very easily. This sums it all on my view on silver.

The top German official at the European Central Bank resigned unexpectedly on Friday in conflict with the bank's policy of buying government bonds to combat the euro zone's debt crisis. The ECB confirmed Executive Board Member Juergen Stark, the central bank's chief economist, would leave "for personal reasons" by the end of the year once a replacement was found, after Reuters reported exclusively that he had quit.

 

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. Nothing in this article is, or should be construed as, investment advice. Prepared By Chintan Karnani. Website www.insigniaconsultants.in

Happy profitable Trading

PLEASE NOTE: HOLDS MEANS HOLDS ON DAILY CLOSING BASIS

PLEASE USE APPROPRIATE STOP LOSSES ON INTRA DAY TRADES TO LIMIT LOSSES.

Customer care: 9811139549/9311139549

You can also mail your queries at chintan@insigniaindia.com

APPROPRIATE STOP LOSSES PER LOT IN US DOLLARS ON THE TRADING CALLS GIVEN IN THIS REPORT

COMEX GOLD – $15-$17

COMEX SILVER: $25-$30

COMEX COPPER: $3

NYMEX CRUDE OIL: $0.60

SPOT SILVER: $0.25

SPOT GOLD: $15-$17


-- Posted Monday, 12 September 2011 | Digg This Article | Source: GoldSeek.com

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Sita Ram Bazar, New Delhi-110006. India.
Ph: [O] 91-11-30919880 [M] 09811139549
Website: www.insigniaindia.com
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