|
-- Posted Tuesday, 22 February 2011 | | Source: GoldSeek.com
This is something of a rhetorical question. At the time of writing this article both gold and silver prices have slipped sharply off the highs of yesterday, while stock markets in Asia are taking a bashing. In every statement made on ArabianMoney commenting on the price of gold and silver we also add the rider that a big stock market correction would almost certainly bring gold and silver prices down. This is now happening, even though silver posted a 31-year high of $33.70 as recently as yesterday. Margin calls As we have explained many times in the past there is good reason for this reaction to crashing stock markets. Basically as stocks fall there are margin calls to big investors requiring them to put up more money, and to obtain that cash they have to sell their gold and silver. They often have no choice in this, so the impact on precious metals is automatic. The relationship is as simple as that, particularly when stocks go into a nose dive. Asian stocks are of course reacting to the oil price and events in Libya where the regime seems to be on the brink of collapse and, unlike Egypt and Tunisia, Libya is a major oil exporter – producing 20 per cent of Italian supplies. Naturally the fact that Asian buyers have been the most active in the precious metals market recently will exaggerate the impact of falling Asian bourses on the price of gold and silver. Shanghai stocks fell the most at 2.9 per cent. Oil price outlook Markets are also finally turning from the greed of the past few weeks to a sentiment of fear about the future. Most pertinently the question is now rather belatedly being asked about which nation comes next in the Middle East unrest, and will it be a major oil producer like Saudi Arabia or Iran. Who knows with news blackouts in those countries not exactly reassuring markets. Gold and silver should therefore sell-off with stocks until markets find a bottom, and then stabilize. ArabianMoney would regard that as an ideal buying opportunity for precious metals, and readers of our newsletter will know exactly what to do (click here to sign-up).
-- Posted Tuesday, 22 February 2011 | 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
|
Will stock market crashes now bring gold and silver prices down?
