Gold and silver demand

It's difficult to say where the current sharpish upwards movement in price will end. There could well be resistance at the $620 level, with a period of consolidation between $610 and $620 before another breakout, but if the gold price moves upwards too fast (for everyone except the real gold bulls who don't think it can rise too fast!) there is likely to be a fairly rapid correction. The pattern would seem to be one of increase and consolidation for a period of time, one just has to call the resistance points if one wants to play the market to the best effect.

Gold and silver stocks, particularly marginal operators, can be highly leveraged to the gold price so one should see some good positive movement in share prices, but the big cloud on the horizon is costs increases. Also perceived high prices can lead to political and labour difficulties with the various stakeholders requiring a larger piece of a larger pie. This is all very well as long as the price keeps rising, but history tells us that at some stage it will fall back and then marginal mines will become sub-marginal and may have to close down. Every silver lining has a cloud!

Do not forget China has not standardized gold and silver retail infrastructure as yet, this will take shape over the next few years fueling massive new demand. Do not forget China has an ancient rich culture which embraces gold and silver ownership in a way the West does not understand. As the three forces of increasing average earnings, cultural affinity for precious metals and a standardized retail distribution network join together we will see a triple wave crest which will drive PM demand through the roof.

The Chinese Government and wealthy Chinese are extremely astute and this would not have escaped their attention. It is not their biggest consideration as they manage their economic plans, yet it will be on their agenda make no mistake about that. Wealthy Chinese insiders are probably loading up at current historically cheap levels, gold investment increased by 20% in China last year.


Base Metals - A Gold Alternative? by Alf Field 321gold
Markets about to turn the screws on the Fed? by Steve Saville 321gold
Droplet splatter dispersion exceeded by Richard Daughty 321gold
Post US Election anti investment pussyfooting by Chris Laird 321gold
Traders: Optimistically Pessimistic by Howard Marella 321gold

<< My Home | TheMoneyBlogs Home

• How (bad) Certain Investments Did Last Week
• Dow Dips Below 8,000 Threshold, Reaching April 2003 Levels
• Some Insight From The Blogs:
• Canslim.net Morning Comment And Links (for Traders)
• Stocks Fail To Turn Up; Sec's Shorting Ban On Financial Shares Expires

• October 2008
• September 2008
• August 2008
• July 2008
• June 2008
• May 2008
• April 2008
• March 2008
• February 2008
• January 2008
• December 2007
• November 2007
• October 2007
• September 2007
• August 2007
• July 2007
• June 2007
• May 2007
• April 2007
• March 2007
• February 2007
• January 2007
• December 2006
• November 2006
• October 2006
• September 2006
• August 2006
• July 2006

• Millionaire Now!
• The 7 Steps to Millionaire Now!
• Build Your Financial Plan
• RETIRE RICH: Survival Guide
• ASSET ALLOCATION MODEL
• THE BIG ROLLOVER IS HERE
• THE END OF THE GRAND SUPERCYCLE?

• Biiwii.com Notes
• Who Has Time For This?

• Take Back The Web!
• Nftrh Email Issues