-- Posted Monday, 19 September 2011 | | Disqus

Gold got as high as $1,923 at the end of last month and has traded as much as $200 lower since then. Silver has been less volatile for a change and held steady around $40-42 an ounce.

We had thought gold might pass $2,000 before this correction but that price will probably not now be seen until after the global financial crisis rather than immediately before it. Indeed, the prospect now is for more volatility and most likely a big plunge in precious metal prices when financial markets finally sell-off.

Day of Reckoning

It could be that eurozone crisis managment staves off this Day of Reckoning into the New Year or that a Greek debt default could be upon us very soon (click here). Buyer beware, seize that opportunity to buy gold and silver.

The technical charts point to gold dropping to around $1,600 and silver perhaps dropping as low as $20. That is scary stuff for new buyers but anybody who lived through 2008 has been through this before and lived to tell the tale.

The lesson of 2008 – and if this pattern is repeated that clearly validates this lesson – is that gold and silver will rebound faster and higher than anything else. But we would still hold onto existing gold and silver positions just in case that is wrong – like the predictions of a sell-off last year which would have missed a 110 per cent rise in silver prices and 50 per cent hike in gold since then.

But should the big crash occur that is the very moment to stack up on silver and gold related investments. The next edition of the ArabianMoney newsletter will have some clear thoughts on what might be best to buy then (subscribe here).

Much higher prices

We still think author Mike Maloney has it right with his seemingly outlandish predictions for gold and silver prices (click here). Yet note that precious metals do not go up in price in a straight line or deliver regular returns like a bank deposit account.

Short term volatility is always a risk and often a reality. It is only when you look back at the chart a few years later that it just looks like a blip on a generally upward moving line. That blip is the buying opportunity with the benefit of hindsight.

Only when the long-term upward trend is over should you cash out of gold and silver, and then everybody will be invested in these metals. Today everybody is starting to talk about making an investment but you meet very few who have actually done so and that leaves plenty of potential buyers for the next stage up.

-- Posted Monday, 19 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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