Gold & Silver - Up, up and away...

Well, it looks like the correction is finally over. There is still room for one more dip but that is looking more unlikely all the time, especially with the current wave of financial news concerning Fannie Mae and Freddie Mac.

The press, which has a time horizon of about 4 hours when writing about the precious metals always has headlines like:

"Gold falls on dollar strength, weak oil"

or

"Gold gains on strong oil, weak dollar"

or

"Gold gains on Nigerian tension"

Now, I don't disagree with there being a relationship between various commodities, indices and news, there clearly is, but the press never gives credit to precious metals for their own sake. Recently gold was going down as oil was going up so the relationship isn't hard and fast. More importantly, they report in isolation absolute. Each slice of 24 hours is entirely disconnected. It takes time for people's confidence in stocks and currencies to be worn down enough for them to seek safe havens. If you're an investor watching your pension tank, it takes time to sell up and move into metals. I realise investment demand is still a minor factor, it just irks me when the news dresses it down as if there is always a single reason that very day. It just doesn't seem realistic.

If you want evidence of manipulations, just look a physical silver. The going rate on ebay now for 100oz bars and below is 30-50% over spot rate!!! That's evidence of a physical shortage, however temporary. The free market price discovery mechanism is only teasing sellers out at that kind of mark up and buyers seem willing to pay. If there was plenty of silver around it would be less of a sellers market. Small futures markets like silver are too easy to manipulate by big money. I'm praying for a delivery default to bring balance and give silver the respect it deserves.

I do see a few problems breaching $1000/toz because that appears to be where the western central banks have placed their army of resistance. The phrase "pissing into the wind" springs to mind. But they'll have a good fews goes at pushing the price down. People invest in rising markets, so any significant increase over that psychological barrier would mean more flight to gold from the dollar.

If you haven't already acquired some metals, you're running out of time. My estimation of $1200/troy oz. by the end of the year is still possible. If you're waiting for lower prices, it looks like you'll never get the opportunity to buy and the chance of the next major correction falling to current prices is so remote, you'd make more money putting a £1 on it at a bookies.