-- Posted Sunday, 3 March 2013 | | Disqus

Gold and silver are selling at bargain basement prices this month but watch out this offer will not last for very long. The yellow metal is close to the bottom of its trading range and overdue for a breakout to the upside and silver will follow with a vengeance.

Why can we be so confident when the gold bears are growling so loudly? Goldman Sachs is equivocating on gold again, and Credit Suisse says the gold bull market is now over, mind you they told us that in 2004 at a private seminar in Dubai!

What economic recovery?

Basically it is because the gold bear thesis rests on a recovering US economy that is just not happening in any meaningful way and is taking some big body blows right now. Yes, the $85 billion sequester cuts and more to come by the end of the month from Washington. It’s US austerity time, not a new boom.

That means there will be a rotation out of risky assets like stocks that are close to all-time highs, and back into safe havens like bonds and precious metals. We don’t doubt that a stock market correction will drag gold and silver down too, but we don’t think there will be a 2008-style crash for gold and silver. There are too many willing buyers out there.

We’ve just been listening to a great radio interview with gold industry legend Jim Sinclair (click here). He sees gold bottoming out this month and then resuming its climb. His medium term target is $3,500 an ounce, although $4-5,000 will be the trading range at the top.

New gold standard?

As we have discussed on ArabianMoney before, Jim Sinclair reckons the global central banks will eventually have to induce higher gold prices to balance their books. It is a powerful thesis that nobody has convincingly refuted as yet. If the debt side of the equation is too high, you have to raise asset values to compensate and central banks hold a lot of gold.

You will need nerves of steel to buy precious metals as the global financial markets correct this month. But then think back to 2008 and that would have been a great trading move in those dark days too.

Shorting stocks and waiting for the low in silver would likely be the winning trade for the month. Those already in precious metals should just hang on in there for the market reversal.

-- Posted Sunday, 3 March 2013 | 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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