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Gold and silver facing an exceptionally volatile autumn?

By: Peter Cooper, Arabian Money

-- Posted Thursday, 2 August 2012 | | Disqus

Gold and silver investors are coming through the normal summer lows in prices and there are some nice price gains already from these summer lows.

Autumn is traditionally the best season for precious metal prices. Gold hit an all-time high of $1,923 on September 6th last year before a sharp correction. We could well see a similar pattern this year, only perhaps with even greater volatility.

Eurozone debt crisis

The reason? The 600lb gorilla sitting in the front room is the incredibly long and tedious eurozone sovereign debt crisis, an immovable object of great size and ferocity.

It threatens a 2008-style global financial crisis this autumn once market finally get it and realize that the central banks’ power to save the system is an illusion, like making a loud noise to frighten off a gorilla. Once that happens the precious metals will sell-off, but we may well have some excitement to the upside before then.

Why so? Partly because traders will seize the opportunity to trade the autumn cycle which is linked to religious festivals like Ramadan that ends in late August this year. There is also a feeling that while global financial markets are in danger, it is not imminent.

Gold and silver also look very oversold and due for a rebound, and traders are usually happy to oblige in raising prices in these circumstances, other things being equal as they usually are in August. Besides none of the good arguments for owning gold and silver have changed.

Money printing

The talk about money printing as the salvation of the world and inflation as the next big thing, only gets louder. The pressure on the Germans to allow more inflation in the eurozone to save the euro is now intense. You push against a wall for long enough and it will fall over.

Every ratchet up in monetary easing, whether from the Fed, ECB, BoE, Bank of China or Bank of Japan is manna from heaven for precious metal investors. How can you possibly lose in an investment with all the central banks of the world on your side?

Ultimately perhaps not, but that does not protect you from volatility and it could be exceptionally high this autumn if we get a surge in precious metal prices followed by a global financial market crash.

-- Posted Thursday, 2 August 2012 | Digg This Article | Source:

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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, 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 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 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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