For those of you who track the Precious metal markets, you may have noticed a rather large downturn as of late, 30% in the past year. It appears as though the 12 year bull market has come to a close. This has happened we have been told because of a few different factors. The primary one’s being the recovery of the US Dollar to once again be a major Currency around the world, the up swing in the European and American economy’s and the beginning of the end of the quantitative easing of the US economy. Because Gold is traded in US Dollars around the world all of these factors have played a role. The high point for the market was in the fall of 2011 when Gold reached an all time high of 1900 + Dollars a once and Silver was at 49.00 Dollars an ounce. Since then the markets have been on a down swing.
Now I am not going to predict that Gold is still going to go to 5000.00 an ounce as I did not in the past or now do I see the metal gaining by such leaps and bounds. But I will predict that Gold has not seen its bottom yet and when it does it will once again start to rise. The biggest question is where the bottom is. If you listen to the talking heads you can hear anything from 900.00 to 1150.00. All I can tell you is that my crystal ball has been on holiday for years now, and it is not coming back anytime soon.
The Indian market has always been a strong Gold market but due to a severe recession in India they are starting to turn to Silver instead for economic reasons. This is almost unheard as a Father would save his entire life to buy Gold for his Daughters dowry, but it seems not as many now. The rising Chinese middle class is helping to keep the markets bolstered as well as the Middle East especially Dubai, where the laws on Gold are fairly lax and they have Gold vending machines just like a soda machine. Now I know that in the past I have predicted only a rise in the market, but not at this time what I see is a steady market with the usual up and downs within a reasonable range of a couple of hundred dollars. Silver tracks with Gold so it will move accordingly.
One of the big problems in trying to understand the market today is the folks writing the articles are so ambiguous that it has become almost impossible to read between the lines or even be able to glean anything of value from what they are not saying. Just a couple of years ago you could read the market news and be able to make some sense of it. Now it’s a rally in the AM and dire straights when the metal market falls less than 1%. This kind of reporting and market reaction makes it almost impossible to get a grasp on the market let alone try to understand it. So I for one will continue to strive to get a finger hold of understanding and if I am lucky to do so I will gladly pass it along.