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-- Posted Monday, 7 June 2010 | Digg This Article | | Source: GoldSeek.com
If we look at a micro-analysis of the final stages of trading last Friday then it is notable that as the stock market dropped three per cent the price of gold went up and silver went down. Is this some sort of harbinger of the days ahead? Certainly the stock market trend established in the worst May for the Dow Jones Index since 1940 (when the Second World War loomed high on the horizon) is now down. Jobless slump The anemic jobs report left even the most bullish television commentators struggling for words. The reality of an economy that has fallen into a depression and is now at best bumping along the bottom is only too clear. Indeed, the danger looking forward is another dip down as European debt increasingly looks like a very large shoe about to drop. Who had even considered Hungarian public debt before it emerged as the next big problem on Friday? Yet look at how the gold chart performed as the bad news piled up at the close of trading:  Not much doubt about the direction of the gold price as Wall Street sold-off at the end of a volatile week. Sadly the same could not be said about the price of silver:  It seems silver is again being sold down as an industrial commodity and not being considered as a cheaper way to hold gold. That said a market bounce on Monday ought to take silver up and perhaps gold down. But this will be at best short term, if indeed it actually happens. It appears that the late 2008 pattern might be reappearing for silver but for gold it might well be different this time. Golden hedgies On the other hand, a great many hedge funds have bought gold since the late 2008 sell-off and history does have a habit of repeating itself. Funds that need to raise cash to meet margin calls in a hurry tend to sell everything, including their gold. And yet investors have to hold their money in something and cash is not an entirely reliable king in this jungle. If nothing else the recent volatility of the US currency is an argument for at least some diversification of risk, and gold is the preferred diversifier. Could that keep gold heading higher as financial markets crash? Well certainly it looks a new force countering a big correction in the gold price and a repeat of the dramatic 2008-9 price fall.
-- Posted Monday, 7 June 2010 | Digg This Article | Source: GoldSeek.com
Previous Articles by Peter Cooper
About Peter Cooper:
Oxford University educated financial journalist Peter Cooper found himself made redundant by Emap plc in London in the mid-1990s and decided to rebuild his career in Dubai as launch editor of the pioneering magazine Gulf Business. He returned briefly to London in
1999 to complete his first book, a history of the Bovis construction group.
Then in 2000 he went back to Dubai to become an Internet entrepreneur, just as the dot-com market crashed. But he stumbled across the opportunity to become a partner in www.ameinfo.com, which later became the Middle East's leading English language business news website.
 Over the course of the next seven years he had a ringside seat as editor-in-chief writing about the remarkable transformation of Dubai into a global business and financial hub city. At the same time www.ameinfo.com prospered and was sold in 2006 to Emap plc for $27 million, completing the career circle back to where it began a decade earlier.
He remains a lively commentator and columnist as a freelance journalist based in Dubai and travels extensively each summer with his wife Svetlana. His financial blog www.arabianmoney.net is attracting increasing attention with its focus on investment in gold and silver as a means of prospering during a time of great consumer price inflation and asset price deflation.
Order my book online from this link
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Gold Heading Higher and Silver Lower as Stock Market Crashes?
