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Should the year-end sell-off of gold and silver worry investors?

By: Peter Cooper, Arabian Money


-- Posted Friday, 30 December 2011 | | Disqus

Just as the January edition of the ArabianMoney investment newsletter came out tipping silver and gold for the year ahead with actionable investment advice for subscribers that is not given on this free website (click here), the precious metals staged their biggest price retreat since 2009.

Silver plunged below $27 and gold dived towards the $1,550 mark. At first sight this looks like year-end profit taking by hedge funds who have been big investors in precious metals this year, and largely responsible for the wild price swings.

But after the plunge in the value of the rupee this month there are concerns that gold imports by India, the biggest global consumer of gold could drop as much as 50 per cent, according to the Bombay Bullion Association.

China crisis

China has also restricted gold trading in spot and futures contracts on the Shanghai Gold Exchange and the Shanghai Futures Exchange in an ill-timed move to eliminate illegal trading.

Well, these two factors have likely exaggerated a typical profit-taking cycle by hedge funds. Will they all pile straight back in at the start of the New Year to take advantage of these bargain prices?

It is a fair conclusion but one that will leave precious metal investors with a nervous holiday season. Still gold is up around 10 per cent for the year way ahead of global equities and even hot US treasury bonds.

ArabianMoney is still making silver our tip for the year (click here) but not without the usual volatility warning for silver in red letters ten feet high. How best to invest in silver? Read our newsletter to find out!


-- Posted Friday, 30 December 2011 | Digg This Article | Source: GoldSeek.com

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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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