Gold has fallen again today and is down some 1% but continues to consolidate between $830/oz and $890/oz. Gold should remain well bid given the degree of international macroeconomic and geopolitical risk challenging us as we enter the New Year. The Middle East tensions continue to escalate and oil is up another 2.5% again today to some $50 per barrel again. Silver has outperformed even gold in the last 30 days and is trading very well – up nearly 17% versus gold’s rise of 12%.
Real concerns about bubbles in the US Treasury market and further sharp weakness in the dollar will likely see gold have its ninth positive year of returns. Fearful investors have bid Treasuries up to all time record highs with correspondingly record low yields. However, the macroeconomic and fiscal challenges facing Uncle Sam are of such a significant nature that investors will likely learn in 2009 that US Treasuries and government bonds are not the safe haven they perceive them to be. They have significant currency risk and astute observers are even warning of the possibility of a default. In such a scenario, gold will again come to play a fundamental role in the international monetary system and we would likely see gold at least reach its inflation adjusted high of some $2,400/oz in the coming years.
Silver is massively oversold – probably more oversold than any other commodity or stock market in the world and yet its fundamentals are arguably as sound now as they were before.
Industrial demand for silver is set to fall admittedly but that will be more than made up for by significantly increasing investment demand. Also importantly the supply of silver may fall – silver supply coming primarily from the by product in base metal mines – many of which are failing due to the collapse in base metal prices.
Silver’s average price in Q1 08 was some $18 and this will likely be surpassed in 2009.
It is important to remember that silver’s average price in all of 2008 was some $15/oz and thus silver is currently trading at some 36% below its average price in 2008.
Most importantly, there is less refined silver in the world than gold – a fact that most people simply cannot get their head around and fully understand due to gold being currently some 77 times more valuable than silver.
Above-ground Inventory (billions of ounces)
(Inventory statistics taken from World Gold Council, the Silver Institute, and others, Population data from US Census Bureau)
Silver is likely to return back to its recent highs in 2008 above $20/oz and there is a possibility that silver could reach well over the nominal 1980 high of $50/oz in 2009 (as gold has already comfortably done with an average price of $870 in 2009).
Financial Regulation: Gold & Silver Investments Limited trading as Gold Investments is regulated by the Financial Regulator as a multi-agency intermediary. Our Financial Regulator Reference Number is 39656. Gold Investments is registered in the Companies Registration Office under Company number 377252. Registered for VAT under number 6397252A. Codes of Conduct are imposed by the Financial Regulator and can be accessed at www.financialregulator.ie or from the Financial Regulator at PO Box 9138, College Green, Dublin 2, Ireland. Property, Commodities and Precious Metals are not regulated by the Financial Regulator
Disclaimer: The information in this document has been obtained from sources, which we believe to be reliable. We cannot guarantee its accuracy or completeness. It does not constitute a solicitation for the purchase or sale of any investment. Any person acting on the information contained in this document does so at their own risk. Recommendations in this document may not be suitable for all investors. Individual circumstances should be considered before a decision to invest is taken. Investors should note the following: The value of investments may fall or rise against investors’ interests. Income levels from investments may fluctuate. Changes in exchange rates may have an adverse effect on the value of, or income from, investments denominated in foreign currencies. Past experience is not necessarily a guide to future performance.
All the opinions expressed herein are solely those of Gold & Silver Investments Limited and not those of the Perth Mint. They do not reflect the views of the Perth Mint and the Perth Mint accepts no legal liability or responsibility for any claims made or opinions expressed herein.
Fair Use Notice: This newsletter contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of issues of financial and economic significance. At all times we credit and attribute the copywrite owner and publication.We believe this constitutes a 'fair use' of any such copyrighted material as provided for in Copyright Law. The material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for economic research purposes. If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner.
Mission Statement Gold and Silver Investments Limited hope to inform our clientele of important financial and economic developments and thus help our clientele and prospective clientele understand our rapidly changing global economy and the implications for their livelihoods and wealth. We focus on the medium and long term global macroeconomic trends and how they pertain to the precious metal markets and our clienteles savings, investments and livelihoods. We emphasise prudence, safety and security as they are of paramount importance in the preservation of wealth.
Gold and Silver Investments Ltd. have been awarded the MoneyMate and Investor Magazine Financial Analyst of 2006.
The content on this site is protected by U.S. and international
copyright laws and is the property of SilverSeek.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 SilverSeek.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.
The views contained here may not represent the views of SilverSeek.com,
its affiliates or advertisers. SilverSeek.com 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 SilverSeek.com, is strictly prohibited. In no event shall SilverSeek.com or its affiliates be liable to any person
for any decision made or action taken in reliance upon the information