Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Boris Johnson Hits Coronavirus Panic Button Again, UK Accelertoing Covid-19 Second Wave - 25th Sep 20
Precious Metals Trading Range Doing It’s Job to Confound Bulls and Bears Alike - 25th Sep 20
Gold and Silver Are Still Locked and Loaded… Don't be Out of Ammo - 25th Sep 20
Throwing the golden baby out with the covid bath water - Gold Wins - 25th Sep 20
A Look at the Perilous Psychology of Financial Market Bubbles - 25th Sep 20
Corona Strikes Back In Europe. Will It Boost Gold? - 25th Sep 20
How to Boost the Value of Your Home - 25th Sep 20
Key Time For Stock Markets: Bears Step Up or V-Shaped Bounce - 24th Sep 20
Five ways to recover the day after a good workout - 24th Sep 20
Global Stock Markets Break Hard To The Downside – Watch Support Levels - 23rd Sep 20
Beware of These Faulty “Inflation Protected” Investments - 23rd Sep 20
What’s Behind Dollar USDX Breakout? - 23rd Sep 20
Still More Room To Stock Market Downside In The Coming Weeks - 23rd Sep 20
Platinum And Palladium Set To Surge As Gold Breaks Higher - 23rd Sep 20
Key Gold Ratios to Other Markets - 23rd Sep 20
Watch Before Upgrading / Buying RTX 3000, RDNA2 - CPU vs GPU Bottlenecks - 23rd Sep 20
Online Elliott Wave Markets Trading Course Worth $129 for FREE! - 22nd Sep 20
Gold Price Overboughtness Risk - 22nd Sep 20
Central Banking Cartel Promises ZIRP Until at Least 2023 - 22nd Sep 20
Stock Market Correction Approaching Initial Objective - 22nd Sep 20
Silver Bulls Will Be Handsomely Rewarded - 21st Sep 20
Fed Will Not Hike Rates For Years. Gold Should Like It - 21st Sep 20
US Financial Market Forecasts and Elliott Wave Analysis Resources - 21st Sep 20
How to Avoid Currency Exchange Risk during COVID - 21st Sep 20
Crude Oil – A Slight Move Higher Has Not Reversed The Bearish Trend - 20th Sep 20
Do This Instead Of Trying To Find The “Next Amazon” - 20th Sep 20
5 Significant Benefits of the MT4 Trading Platform for Forex Traders - 20th Sep 20
A Warning of Economic Collapse - 20th Sep 20
The Connection Between Stocks and the Economy is not What Most Investors Think - 19th Sep 20
A Virus So Deadly, The Government Has to Test You to See If You Have It - 19th Sep 20
Will Lagarde and Mnuchin Push Gold Higher? - 19th Sep 20
RTX 3080 Mania, Ebay Scalpers Crazy Prices £62,000 Trollers Insane Bids for a £649 GPU! - 19th Sep 20
A Greater Economic Depression For The 21st Century - 19th Sep 20
The United Floor in Stocks - 19th Sep 20
Mobile Gaming Market Trends And The Expected Future Developments - 19th Sep 20
The S&P 500 appears ready to correct, and that is a good thing - 18th Sep 20
It’s Go Time for Gold Price! Next Stop $2,250 - 18th Sep 20
Forget AMD RDNA2 and Buy Nvidia RTX 3080 FE GPU's NOW Before Price - 18th Sep 20
Best Back to School / University Black Face Masks Quick and Easy from Amazon - 18th Sep 20
3 Types of Loans to Buy an Existing Business - 18th Sep 20
How to tell Budgie Gender, Male or Female Sex for Young and Mature Parakeets - 18th Sep 20
Fasten Your Seatbelts Stock Market Make Or Break – Big Trends Ahead - 17th Sep 20
Peak Financialism And Post-Capitalist Economics - 17th Sep 20
Challenges of Working from Home - 17th Sep 20
Sheffield Heading for Coronavirus Lockdown as Covid Deaths Pass 432 - 17th Sep 20
What Does this Valuable Gold Miners Indicator Say Now? - 16th Sep 20
President Trump and Crimes Against Humanity - 16th Sep 20
Slow Economic Recovery from CoronaVirus Unlikely to Impede Strong Demand for Metals - 16th Sep 20
Why the Knives Are Out for Trump’s Fed Critic Judy Shelton - 16th Sep 20
Operation Moonshot: Get Ready for Millions of New COVAIDS Positives in the UK! - 16th Sep 20
Stock Market Approaching Correction Objective - 15th Sep 20
Look at This Big Reminder of Stock Market Mania - 15th Sep 20
Three Key Principles for Successful Disruption Investors - 15th Sep 20
Billionaire Hedge Fund Manager Warns of 10% Inflation - 15th Sep 20
Gold Price Reaches $2,000 Amid Dollar Depreciation - 15th Sep 20
GLD, IAU Big Gold ETF Buying MIA - 14th Sep 20
Why Bill Gates Is Betting Millions on Synthetic Biology - 14th Sep 20
Stock Market SPY Expectations For The Rest Of September - 14th Sep 20
Gold Price Gann Angle Update - 14th Sep 20
Stock Market Recovery from the Sharp Correction Goes On - 14th Sep 20
Is this the End of Capitalism? - 13th Sep 20
The Silver Big Prize - 13th Sep 20
U.S. Shares Plunged. Is Gold Next? - 13th Sep 20
Why Are 7,500 Oil Barrels Floating on this London Lake? - 13th Sep 20
Sheffield 432 Covid-19 Deaths, Last City Centre Shop Before Next Lockdown - 13th Sep 20
Biden or Trump Will Keep The Money Spigots Open - 13th Sep 20
Gold And Silver Up, Down, Sideways, Up - 13th Sep 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

The Best Reasons to Buy Silver and Gold Now

Commodities / Gold & Silver 2009 Oct 13, 2009 - 04:27 PM GMT

By: Sean_Brodrick


Best Financial Markets Analysis ArticleThe spot price of gold soared to its highest level ever this week, as the dollar tanked and precious metals bears got mauled. But many investors, still sitting on the sidelines, ask themselves: Do I want to buy now? NOW?! When gold is over $1,000 an ounce?!

I understand those investors’ concerns — and if you’re one of them, nobody can make the decision for you. It’s doubly hard because the mainstream media is cranking up its anti-gold propaganda to a feverish pitch, like the story that ran in the Wall Street Journal on Tuesday, “Gold Is Still a Lousy Investment.”

I’m not going to give you a link to that story because it is crap. The gold price has doubled in the past four years. Anyone who thinks that a 100 percent return is a lousy investment has serious issues.

The question becomes, what will gold do over the next four years … or 10 years? I think it’s going higher. And silver too — in fact, I think silver will outperform gold.

Let me give you my four hottest reasons why metals should shine.

Reason #1 — Investor Demand Is Strengthening

As any investor knows, the more there is of something, the lower it is valued. That is the problem with all paper currencies now. Central banks have cranked up the printing presses (electronically, anyway) in a desperate bid to prop up financial institutions that are being crushed by the weight of their own bad decisions.

But what kind of money can’t be printed? Gold and silver! Precious metals are money — you can use them to buy stuff, and they are the ultimate currency when other currencies are being devalued. As central banks print more, the private demand for gold as an investment and inflation hedge is growing.

Just look at the track of the gold held by ETFs over the past five years  …


This is all the gold held transparently by gold ETFs around the world — 68.2 million ounces, or 1,933.4 metric tonnes. Gold held in the SPDR Gold Trust, the biggest exchange-traded fund backed by the metal, hit 1,098 tonnes on Monday — close to record highs. That one fund has passed Switzerland as the world’s sixth-largest holder of physical gold.

Looking at the chart, you can see that gold buying by ETFs is accelerating. But if you think the ramp-up in gold-buying by ETFs is something, you should see what’s going on in silver …


The biggest silver ETF by far is the iShares Silver Trust ETF (SLV). So far this year investors have sunk nearly $826 million into the SLV, according to Lipper FMI. That’s nearly as much as they pumped in during ALL of 2008.

So yes, investor demand for metals is heating up. Sure, all that metal could go back on the market in the future. But for now, this is a very bullish force.

Reason #2 — Central Banks Are Buying

There’s no money bigger than the central banks of the world, and the central banks have turned into net buyers of gold. For a decade, they were net sellers.

The World Gold Council reported that in the second quarter of this year — the latest figures available — central banks bought 14 tonnes of gold more than they sold. This was the first time they’ve been net buyers since at least 2000.

And then there’s the new, Third Central Bank Gold Agreement. On August 7, a group of 19 European central banks agreed to renew a pact to limit gold sales to 400 tonnes a year, down from 500 tonnes a year in the second agreement, which expired in late September. Sales in the second agreement really dropped off toward the end, coming in at 25 percent below the total quota as central banks turned from sellers to buyers.

The point is, if central banks — the big money — are buying, why the heck would you want to be selling? Why wouldn’t you want to buy also?

Reason #3 — A Big Gap Is Developing in Production

Last year’s financial crisis really crunched exploration budgets for miners of all types. Worldwide, exploration budgets dropped by 40 percent year over year, according to a study from Canada’s Metals Economics Group. Preliminary reports from the study show that 2009 exploration budgets will reach around $8.4 billion, compared with a global budget of $14 billion last year.

Junior mining companies cut their exploration budgets the most, although most intermediate and major players have made deep reductions of their own in their 2009 exploration plans.

This is going to worsen a supply/demand balance that is already squeezing gold prices higher.

Sources: World Gold Council/GFMS/Barclays

Reason #4 — Gold Is Still Cheap!

Gold has enjoyed a great run — up more than 300 percent from its low in 2001 and 100 percent since January 2006. That sounds good. But Tuesday’s all-time high was still sharply below the inflation-adjusted high. Just look at this chart …

Metals consultancy GFMS put the inflation-adjusted high for gold at $2,079 an ounce. Could it go higher? Bet on it!

These are just four reasons. I could have given you a lot more. And to be sure, there are forces that could weigh on gold prices. The U.S. dollar could find its feet and go higher … jewelry buying in India could fall so much that it could weigh on prices … investors could start selling ETF holdings.

But add it all up, and I think the odds favor much higher prices from here.

So What Should You Buy?

You can always buy the SPDR Gold Trust (GLD), which tracks the price of gold closely. I don’t like the GLD for a long-term investment, but it’s always good for a trade.

You could buy the Market Vectors Gold Miners ETF (GDX) — a basket of big gold and silver miners. ETFs like the GDX lower your risk while still giving you exposure to big moves in a sector or industry.

Or you could buy individual stocks, like I recommend in Red-Hot Global Small-Caps. Those subscribers received the “Gold Fever” report I published in July for free, just my way of saying “thank you” for being subscribers. Let’s see how the “Gold Fever” positions are doing as of Tuesday’s close …

Pretty darned good! The “Gold Fever” portfolio as a whole is up 25 percent since inception, more than DOUBLE the 12 percent rise in gold over the same time frame.

Just be aware that individual stocks are more risky than ETFs. You need to know when to get in as well as when to get out. Do your own due diligence.

I think gold and silver, and the stocks that are leveraged to them, have a long, long way to go. It’s not too late to get in on the action. In fact, the next leg up in gold may still be in its early stages.

Yours for trading profits,


This investment news is brought to you by Uncommon Wisdom. Uncommon Wisdom is a free daily investment newsletter from Weiss Research analysts offering the latest investing news and financial insights for the stock market, precious metals, natural resources, Asian and South American markets. From time to time, the authors of Uncommon Wisdom also cover other topics they feel can contribute to making you healthy, wealthy and wise. To view archives or subscribe, visit

Uncommon Wisdom Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules