-- Posted Wednesday, 28 September 2011 | | Disqus

Even after corrections that have taken down gold prices 10 per cent in the past month and silver 25 per cent, investors are still left well out front holding these precious metals over the past 12 months, up 25 per cent for gold and 40 per cent for silver.

Indeed, these prices rises had clearly gotten too high too fast and a correction was well overdue. Such price action just resets these precious metals back closer to the long-term upward trend line of the past 11 years. It means the up-phase has even longer to run and will go higher.

Better outlook

A short-term spike in prices of the kind that seemed to be emerging last month risked stalling gold and silver near to current price levels. That has not happened and prices will now consolidate before lifting off again.

They certainly hit the price lows traced out in technical charts for a rebound with $26 for silver and $1,530 for gold. Queues formed down the road at jewelers in Hong Kong on Monday as housewives massed to buy gold at bargain prices.

Physical metal prices

These are of course spot prices and it is always tough to buy the actual physical metals at these prices, and by the time most orders got processed the spot price was up $100 for gold and $5 for silver.

We seem to have a floor established then for future volatility in the price of precious metals. However, this volatility is nothing new and parr for the course with commodity investing. You seldom get a straight line in an upward trend.

Both gold and silver fell like a stone in the 2008 financial crash but rebounded faster than anything else. That is a lesson to learn for 2011.

-- Posted Wednesday, 28 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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