Gold surged to a 16-week high of $1,667 and silver passed $30 an ounce as speculation mounted about a new stimulus package from the Federal Reserve and the prospect of similar actions by all the global central banks this autumn.
Readers of ArabianMoney will not be surprised by this seasonal pattern re-occuring. The autumn is usually the best period for gold and silver prices and this year looks no different (click here). Our next monthly newsletter will consider in-depth how best to invest in gold and silver (subscribe here).
Right trade
Those investors who have stayed out of precious metals in the expectation of a big price correction this autumn look to be on the wrong side of this trade and as they reverse position that should push the prices up much higher.
As ArabianMoney argued earlier when this correction finally comes it will be from a much higher price level. Money printing is indeed what makes gold and silver a win-win proposition this fall.
The anticipation of more money printing will take gold and silver prices up. When it happens – most likely after some kind of financial crash in our opinion than before it – then that will boost prices even higher, although a short-term correction would be perfectly normal.
The stage is being set for a powerful advance for precious metals on the back of weak economic fundamentals and desperate interventions by global central banks. Make no mistake this is not good news for the economy.
The central banks are going to have to pull out all the stops to head off deflation, something that would be a disaster for the banking system as the huge debts would overpower it. They have no alternative really and that makes gold and especially silver a one-way bet, albeit with some volatility on the way up.
Inflation happening
Inflation of the money supply will gradually correct the debt position by rebalancing the value of goods and services. It will be particularly painful for those sat on cash, bonds and fixed incomes.
But it works in favour of those investors with fixed assets like gold and silver, farmland, paintings and even real estate in markets that have bottomed out like the US or Dubai, though not those such as the UK where prices have yet to properly correct.
Get on the right side of macroeconomics and you can relax, get it wrong and you are history!
-- Posted Thursday, 23 August 2012 | Digg This Article | Source: GoldSeek.com
comments powered by DisqusPrevious Articles by Peter Cooper 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.
The content on this site is protected
by U.S. and international copyright laws and is the property of GoldSeek.com
and/or the providers of the content under license. By "content" we mean any
information, mode of expression, or other materials and services found on GoldSeek.com.
This includes editorials, news, our writings, graphics, and any and all other
features found on the site. Please contact
us for any further information.
Live GoldSeek Visitor Map | Disclaimer
The views contained here may not represent the views of GoldSeek.com, Gold Seek LLC, its affiliates or advertisers. GoldSeek.com, Gold Seek LLC makes no representation, warranty or guarantee as to the accuracy
or completeness of the information (including news, editorials, prices, statistics,
analyses and the like) provided through its service. Any copying, reproduction
and/or redistribution of any of the documents, data, content or materials contained
on or within this website, without the express written consent of GoldSeek.com, Gold Seek LLC,
is strictly prohibited. In no event shall GoldSeek.com, Gold Seek LLC or its affiliates be
liable to any person for any decision made or action taken in reliance upon
the information provided herein.