It has been quite some time since I wrote another article. I usually don’t even write one when price of gold and silver is steadily going up with some slight corrections and bumps along the way. If I do that means that there is a big fall in gold and silver and usually it is those people who are new in investing who are in a panic. For those who have been investing with me for quite some time they know it is a good chance to rake in more moolah. To make things simple and address to all the fellow precious metal investors’ problems here I am to tell you what happen. Kudos to those that took my advice last time when there was a big fall and this should have been a good year for you despite the fall.
Gold fell by 5 % to about $1,690 an ounce for its biggest one-day drop in more than three years and silver is down by $3 an ounce from session highs. So what is the main reason that triggers the fall? In his semi-annual testimony to the U.S. Congress, U.S. Federal Reserve Chairman Ben Bernanke did not mention another round of monetary easing which people have been hoping for. He said that while the decline in the U.S. unemployment rate has been more rapid than expected, it would not continue dropping unless economic growth accelerated. Bernanke's remarks hit gold particularly hard because heavy bullish bets had been placed leading up to the European Central Bank's offering of low-interest loans as it bought more time to sort out the debt crisis.
After the news was announced, speculation that central banks might be done with easy monetary policies led funds to exit the bullion trade taking profits from the session high. The main reason for it to drop pass the $1700 limit was due to the triggering of $1700 sell limits, at which point sell signals hit every bid all the way to $1685 then a knee jerk bounce appeared, in some rather chaotic late day trading in paper gold.
This is obviously an old trick in the bag for Bernanke every time he talks in congress. Building up the possibility of a QE and stalling for time by doing nothing. They will cause a short in the precious metal markets in the morning and next day, buy physical with the loot from the small players that get wipe out in the market. This play has been working like a charm so far for them.
So is another round of QE coming? I am 99% sure it will happen. I am not god so I cannot be 100% sure right. There will come a point in time when there is no more rabbit for Ben to pull out from his hat to stall for time and he will have to pull out the QE. As long as USA and Europe crisis persist. Gold and silver will continue to rise steadily. They are definitely not on its way to a healthy recovery. It is like a sick final stage cancer patient now given morphine (QE) as a last resort for pain relief. They will need more than a miracle from god to save them.
Look at the report above. Now Europe is the sweatshop for China. Last time the Europeans goes to China to set up manufacturing plants where it is cheaper. Now China is doing the same to them. The world is starting to shift. Even in NBA a young and talented Chinese basketball player by the name of Jeremy Lin is dominating the news with his Linsanity winning streak. Actually this got nothing to do with gold but I am currently in a Jeremy Lin fever as well.
For those who missed out my previous article for my general outlook for gold and silver please read in the above link.
I always end off with this. 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.
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