Gold and silver have another major fall this month. Do you know what this means, it is time to do a shopping spree for physical gold before Christmas. Here is a brief update on what happen and for our student and subscribers this should be nothing new to you because we know what is happening.
First let us look at some of the major happening that causes this. In Europe the leaders’ agreement to deepen economic ties in the region faded quickly on 12th Dec, leading to sharp falls in commodities and equities markets. The EU agreement did little to satisfy ratings agencies, and investors were bracing for a possible mass downgrade of euro zone nations as soon as this week.
In USA the Federal Reserve looks set to hold off on easing monetary policy for a second meeting in a row as it gauges the impact of Europe's crisis on the U.S. economy and ponders additional transparency steps. USD rally due to attention focus into the Europe’s crisis and thus investor go into USD and bonds as the currently perceived safe haven. Like always the USD usually has an inverse relationship with gold. The higher the USD the more expensive it becomes to hold gold and will deter some people of buying.
And guess what this is option expiry week. As I mention many times before there is always an issue with CME taking delivery when options expire. For every big movement up in gold and silver they will lose tons of money. It has become normal that major news in the options expiry week will cause a big downward correction.
Back to the fundamentals, Gold usually hits a low during the fourth quarter of the year. I usually just treat it as a year-end sale for me to load up more physical gold. In the first quarter of the New Year it will usually go through a strong rally. The gold price look set to even breach the 200 day moving average for the first time since 08. Even if it does break it does this mean gold is bearish? The answer is no. In the past 10 years gold have breach the 200 days moving average before a few times. In 4th quarter of 08 gold breach the 200 days moving average but recover and went up stronger than ever. Overall the long term sentiments for gold are still bullish as long as the current world situation does not dissolve.
Perhaps Europe can pay off their immeasurable amount of debt and get out of their current crisis. Perhaps Ben Bernanke and the Federal Reserve might stop printing money and USA is able to cut spending, get out of war and pay back their 15 trillion. Perhaps one day Wall Street and the banks might realize one day that fractional reserve banking and credit cards are not good for the economy. Perhaps tomorrow miracles might happen but looking at the current situation the possibility is close to zero.
Like I say before and I will say again. The real money will come from physical gold and silver and I always advocate to my clients, families and friends that physical gold and silver is for the long run. Horde up when you have the chance when there is a dip to increase your physical stash. Our journey on the gold and silver bullet train is only halfway through and is far from over. Do not fear or panic as we know that our destination to true wealth is just ahead.
American Silver Eagles 2011
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