Gold Bullion Trading on the Up

January 20, 2009 | By | Reply More

The Obama effect has started with gold bullion trading in Europe reflecting investors doubts over the level of spending to ‘kick start’ the economy envisaged by the new administration.

Although the US dollar has been showing strength against the euro, and particularly the pound sterling, the long term consequences of an unbridled Obama spending spree is bound to have a detrimental effect on the value of the dollar before very long.

Not that the European economies are looking any better as the banking sector follows in the wake of its US counterparts.

It is the currencies of the emerging nations and Japan that will be calling the tune as the dollar, pound and euro plunge.

This mornings’ European trading has broken the long held belief that oil and gold move in unison.

We have noted in the past that we have reservations concerning the logic of this view and there have been recent indications that the link is unravelling.

US light crude oil is trading below $34 a barrel, seems to us that this is an opportunity to get into oil before the producers seriously flex their muscles.

Returning to gold, the outlook remains unchanged from the bullish views we have expressed in past articles. We read today that new gold production is forecast to drop this year by 4%, on top of declining production in previous years, this adds an extra dimension to our optimistic expectations.

Despite the greater dependency of silver on industrial usage we believe that any doubts held by investors that the recession will adversely effect demand will be overcome by a combination of a cut back in production from uneconomic mines where silver is a by-product, lack of capital investment and that the metal will not break from its traditional role as an alternative to fiat currencies second only to gold.

The volume of trading in the silver market is far less than in gold so do not be surprised to see silver enjoy a greater percentage upward movement in price than gold.

The simplest way for the average investor to carry out gold bullion trading is by opening an account at www.bullionvault.com . The site is easy to navigate and to trade the metal with a chart facility, choice of currencies and we particularly like the fact that buyers can choose from vaults in London, New York or Zurich.

It will come as no surprise that 75% of their clients prefer to store in Switzerland.

The alternative is to trade a gold ETF where the added advantage is to gain exposure by buying or selling options.

To seriously leverage the expected rise in gold, and also if you are a silver believer, is to go for a major established miner who is likely to be resilient enough to survive and not wipe you out should the unexpected occur.

Related Posts Plugin for WordPress, Blogger...
More on this topic (What's this?)
Has Gold & Silver Finally Bottomed?
Gold Price Gravitating Lower Towards $1000
Read more on Gold, Metals at Wikinvest

Category: Bullion

Leave a Reply

BullionVault