Best of the Week
Most Popular
1. Will Gold Price Breakout? 3 Things to Watch… - Jordan_Roy_Byrne
2.China Invades Saudi Oil Realm: PetroDollar Kill - Jim_Willie_CB
3.Bitcoin Price Trend Forecast, Paypal FUD Fake Cryptocurrency Warning - Nadeem_Walayat
4.The Stock Market Trend is Your Friend ’til the Very End - Rambus_Chartology
5.This Isn’t Your Grandfather’s (1960s) Inflation Scare - F_F_Wiley
6.GDX Gold Mining Stocks Fundamentals - Zeal_LLC
7.US Housing Real Estate Market and Banking Pressures Are Building - Chris_Vermeulen
8.Return of Stock Market Volatility Amidst Political Chaos and Uncertain Economy - Buildadv
9.Can Bitcoin Price Rally Continue After Paypal Fake FUD Attack? - Nadeem_Walayat
10.Warning Economic Implosion on the Horizon - Chris_Vermeulen
Last 7 days
What to Expect at a Critical Stock Market Point: End of a Wave 2 Rally - 26th Apr 18
A New Lithium War Is About To Begin, Modern Gold Rush! - 26th Apr 18
Silver, silver, and silver! There’s More Than Silver, People! - 26th Apr 18
How to be Financially Prepared When Purchasing Your First Home - 26th Apr 18
Is a Stock Market Crash Imminent or Does this Stock Market Bull Still Have Legs - 25th Apr 18
Gold Price Focusing on May Cycle Bottom - 25th Apr 18
Cash “Vanishes” From Bank Accounts In Ireland - 25th Apr 18
Is the Malaysian Economy a Potemkin Village - 25th Apr 18
Land Rover Discovery Sport Rattling / Knocking Sounds From Car Pillars - 25th Apr 18
China Takes the Long View on Gold-Silver... and So Should You - 25th Apr 18
Russia Buys 300,000 Ounces Of Gold In March – Nears 2,000 Tons In Gold Reserves - 24th Apr 18
Stock Market Study Shows Why You Shouldn’t “Sell in May and Go Away” - 24th Apr 18
CRYPTOCURRENCY MASTERCLASS #CRY90 - 24th Apr 18
UK Gambling Statistics - What the Numbers Say - 24th Apr 18
Chaos Capitalists Short Countries - How Chanos Got China Wrong - 24th Apr
Artificial Intelligence Defines the Political News Narrative - 24th Apr 18
Stock Market "Oops, They Did It Again" - 24th Apr 18
Fox in the Henhouse: Why Interest Rates Are Rising - 23rd Apr 18
Stocks and Bonds, This is Not a Market - 23rd Apr 18
Happy Anniversary Silver Investors! - 23rd Apr 18
The Hottest Commodity Play In 2018 - 23rd Apr 18
Stock Market Correction Turns Consolidation - 23rd Apr 18
Silver Squeeze, Gold Fails & GDX Breadth - 23rd Apr 18
US Economy Is Cooked, the Growth Cycle has Peaked - 23rd Apr 18
Inflation, With a Shelf Life - 23rd Apr 18 - Gary_Tanashian
Stock Market Predictive Modeling Is Calling For A Continued Rally - 22nd Apr 18
SWEATCOIN - Get PAID to WALK! Incentive to Burn Fat and Lose Weight - Review - 22nd Apr 18
Sheffield Local Elections 2018 Forecast Results - 22nd Apr 18
How Long Does it take for a 10%+ Stock Market Correction to Make New Highs - 21st Apr 18
Sheffield Ruling Labour Party Could Lose 10 Council Seats at May Local Elections - 21st Apr 18
Crude Oil Price Trend Forecast - Saudi Arabia $80 ARAMCO Stock IPO Target - 21st Apr 18
Gold Price Nearing Bull Market Breakout, Stocks to Follow - 20th Apr 18
What’s Bitcoin Really Worth? - 20th Apr 18
Stock Market May "Let Go" - 20th Apr 18
Overwhelming Evidence Against Near Stock Market Grand Supercycle Top - 20th Apr 18
Crude Oil Price Trend Forecast - Saudi's Want $100 for ARAMCO Stock IPO - 20th Apr 18
The Incredible Silver Trade – What You Need to Know - 20th Apr 18
Is War "Hell" for the Stock Market? - 19th Apr 18
Palladium Bullion Surges 17% In 9 Days On Russian Supply Concerns - 19th Apr 18
Breadth Study Suggests that Stock Market Bottom is Already In - 19th Apr 18
Allegory Regarding Investment Decisions Made On Basis Of Government’s Income Statement, Balance Sheet - 19th Apr 18
Gold – A Unique Repeat of the 2007 and How to Profit - 19th Apr 18
Abbeydale Park Rise Cherry Tree's in Blossom - Sheffield Street Tree Protests - 19th Apr 18
The Stock Market “Turn of the Month Effect” Exists in 11 of 11 Countries - 18th Apr 18
Winter is Coming - Coming Storms Will Bring Out the Best and Worst in Humanity - 18th Apr 18
What Does it Take to Create Living Wage Jobs? - 18th Apr 18
Gold and Silver Buy Signals - 18th Apr 18
WINTER IS COMING - The Ongoing Fourth Turning Crisis Part2 - 18th Apr 18
A Stock Market Rally on Low Volume is NOT Bearish - 17th Apr 18
Three Gold Charts, One Big Gold Stocks Opportunity - 17th Apr 18
Crude Oil Price As Bullish as it Seems? - 17th Apr 18
A Good Time to Buy Facebook? - 17th Apr 18
THE Financial Crisis Acronym of 2008 is Sounding Another Alarm - 16th Apr 18
Bombs, Missiles and War – What to Expect Next from the Stock Market - 16th Apr 18
Global Debt Bubble Hits New All Time High – One Quadrillion Reasons To Buy Gold - 16th Apr 18
Will Bitcoin Ever Recover? - 16th Apr 18
Stock Market Futures Bounce, But Stopped at Trendline - 16th Apr 18
How To Profit As Oil Prices Explode - 16th Apr 18
Junior Mining Stocks are Close to Breaking Downtrend - 16th Apr 18
Look Inside a Caravan at UK Holiday Park for Summer 2018 - Hoseasons Cayton Bay Sea Side - 16th Apr 18
Stock Market More Weakness? How Much? - 15th Apr 18
Time for the Gold Bulls to Show their Mettle - 15th Apr 18
Trading Markets Amid Sound of Wars - 15th Apr 18
Sugar Commodity Buying Levels Analysis - 14th Apr 18
The Oil Trade May Be Coming Alive - 14th Apr 18

Market Oracle FREE Newsletter

Trading Lessons

Gold and Silver Where From Here?

Commodities / Gold and Silver 2013 Mar 28, 2013 - 05:37 PM GMT

By: Julian_DW_Phillips

Commodities

These days gold and silver seem to attract more attention than pretty much any other commodity, perhaps other than oil, and not a day goes by without numerous commentators:

■on one side extolling the ownership and prospective higher prices of both physical gold and physical silver; and,
■on the other side decrying the ownership of both physical gold and physical silver.


While these commentators may well believe strongly in the positions they take, many of them have either a declared or obvious vested interest in their 'side of the argument'. Further, it has always struck me that some of them have 'ridden the horse they ride' for so long that they very likely are attached to the saddles they are sitting in by crazy glue and couldn't get unstuck from their positions if they wanted to.

Some commentators, my observation being principally those on the 'long side' of the gold/silver debate, parade out comparative gold/silver, gold/dow, silver/dow, gold/historic inflation rate, silver/historic inflation rate ... you name it ... relationships as 'proof positive' that gold and/or silver inevitably will go materially upward or downward in price. My principal concern with these comparative approaches is that I think that generally the 'historic base times' were times of quite different macro-economic circumstance than the macro-economic circumstances that prevail today.

So where am I today with respect to the gold (and silver) price:

■first, in both theory and in the end in practice, the financial markets have to reflect the long-term macro-economic condition. By this I mean that while at any given time the financial markets may not reflect macro-economic conditions, over time the financial markets do reflect macro-economic conditions. Thus in 2007 one might say the financial markets were not reflecting macro-economic conditions, but adjusted in the fall of 2008 and again in March 2009 to changes in those conditions;

■second, I do not believe, irrespective of how many 'smart' traders and money managers there are on Bay Street, in The City, and on Wall and every other financial street in the world, that the financial markets today (which I believe predominantly to be trading markets) are reflecting the near-term, let alone the long-term macro-economic developed country condition;

■third, I am highly skeptical of those who actively participate in the gold and silver markets and who forecast gold and silver prices without stating their macro-economic assumptions;

■fourth, I am highly skeptical of 'vested interest' financial markets executives, money managers and pundits who would have us all believe in respect of the current stock market index records that 'you ain't seen nothing yet'; and,

■fifth, as I see things from a high level macro-economic point of view, very little has changed in the past year - other than a lot of rhetoric and postponement has gone under the proverbial bridge. If anything, I believe a good case can be made that things have deteriorated somewhat in the past twelve months, notwithstanding the 'good news' on unemployment, housing, and shale oil and gas coming from U.S. politicians and commentators.

In support of this, consider that:

■the U.S., the world's largest economy and critical to world macro-economics, has if anything become more politically polarized in the past year, has not solved its debt problems, has not materially improved its annual trade deficit, has not materially changed in its Main Street job opportunities, and 'continues to muddle along economically' while supporting what growth it is achieving largely through extraordinarily easy money policies;

■the United Kingdom, the world's seventh largest economy, likewise continues to muddle along;

■the 17 country Eurozone, led by Germany, France, Italy and Spain in declining order of economic size as a practical matter has done little in the last year to solve its country specific economic problems, and likewise continues to muddle along economically. This where circumstances and conditions in Spain and Italy seem to have declined in recent weeks;

■China saw a drop in its reported growth rate in 2012 (7.8%), perhaps with a further drop from that reported growth coming, and where there continues to be ongoing negative innuendo with respect to China's economy;

■Japan is in the process of introducing further quantitative easing;

■talk of 'currency wars' ebbs and flows; and,

■in past days when 'little Cyprus burped', the financial markets also burped and the gold price advanced.

In the past two months (on January 15, and again on February 21) Jeffrey Christian of New York's CPM Group commented in this Newsletter on what he saw as a 'risk premium' of (by interpolation) about $625 in the gold price (see Gold: The risk premium inherent in gold prices, and Gold: More on the risk free gold price).

Given how I see the comparative macro-economic climate one year ago (when the physical gold price was about $1,675) against how I see it now (when the physical gold price has hovered around $1,600 of late) I currently think that:

■barring one or more near-term material (i.e. significant) unexpected negative or positive macro-economic events which could in turn materially impact the price of gold in a 'safe-haven context', the price of physical gold is likely to fluctuate in the near-term in a 'knee-jerk' manner as what are becoming 'normal course' macro-economic events unfold for better or worse; and,

■most of what is said about the ongoing gold (and silver) price that suggest highly negative or highly positive near-term price prognostications typically strikes me as being mostly 'noise'.

Then again, if you read this Newsletter you know I see physical gold as a protector of purchasing power in good and bad times, not something (at least for me) to trade for short-term profit or loss, and hence I am not as concerned about near-term price changes in either gold or silver that many others seem to be.

All that said, a report yesterday says that Mr. Christian's CPM Group has now forecast that:

■physical gold investment demand will fall 3% in 2013;

■gold fabrication and Central Bank demand will increase in 2013;

■the price of physical gold will fall this year, without suggesting an amount; and,

■there will be "muddle-through economic growth for the next few years", the global financial system is not going to collapse, and that monetary accommodation seen to date (read 'quantitative easing') won't lead to hyperinflation.

That latter article is titled CPM Group sees 3% fall in Gold investment demand this year. I suggest you read it if you hold or are thinking of holding physical gold. You ought also to discuss the various views set out herein with your investment advisor and 'smart trader/investor' friends.

Ian R. Campbell, FCA, FCBV, is a recognized Canadian business valuation authority who shares his perspective about the economy, mining and the oil & gas industry on each trading day. Ian is also the founder of Stock Research Portal, which provides stock market data, analysis and research on over 1,600 Mining and Oil & Gas Companies listed on the Toronto and Venture Exchanges. Ian can be contacted at icampbell@srddi.com

© 2013 Copyright Ian R. Campbell - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2018 http://www.MarketOracle.co.uk - 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