-- Posted Tuesday, 6 September 2011 | | Disqus

Just weeks after a dramatic $200 correction the gold price surged past $1,921 today to a new all-time high, and speaking to Bloomberg from his home in Chang Mai in Thailand legendary investor Dr. Marc Faber said gold is not in a bubble just yet.

‘I don’t think that gold is in a bubble, he said. ‘When you buy gold, it’s an insurance against systematic failure and problems in the financial markets.’

Red alert

Looking around the markets this morning the warnings of an impending global financial crisis are written in letters ten feet high, and not surprisingly the banking sector is being heavily shorted and gold and silver prices are up, with gold hitting a new all-time high.

Indeed, as ArabianMoney pointed out when the gold price corrected by $200 and the silver price by 38 per cent in April (click here), such price movements actually strengthen the price trend. Pull backs are consistent with very much higher price levels and not a short-term blow-off or price spike.

However, what is very difficult to say is whether there will be a really big correction of the sort we saw in the autumn of 2008 going into 2009. Then silver prices more than halved and gold by a third.

It was a great bull market buying opportunity but that was little compensation if you had just bought precious metals. That is when our Saudi friends bought $3.5 billion worth of bullion (click here).

ArabianMoney told readers then to hold on and that was the right course of action (click here). It has also been very difficult to judge the peaks and troughs since then, and many professional traders have gotten this wrong and lost heavily. Just buying and holding worked best for all but the cleverest or luckiest traders.

Buying now

So should you stick with gold and silver if you own it, or buy more now if you do not? We certainly think sticking with the physical metals makes sense if you have them. Buying at an all-time high is a much harder call.

But we think silver is the better buy at this point, though it will almost certainly repeat the volatility of April again and several more times on its way to far higher prices. Buy as much as you can stomach with this volatility and sit tight!

The next edition of the ArabianMoney newsletter will discuss how to achieve the best performance from precious metal related investments, sign up now to get this when it comes out (subscribe here).

-- Posted Tuesday, 6 September 2011 | Digg This Article

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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