Financial Gurus And Bubblemania

June 15, 2007 | By | Reply More

The activity on the major stock markets of the world during the last ten days has provoked an extraordinarily diverse number of opinions from English speaking financial gurus on both sides of the Atlantic.

Frankly we at Precious Metal Investment are at a loss to know how to read the entrails of the current market, there are so many contradictions that the application of common sense, at least in the short term, seems to offer no tangible solution.


When we ask ourselves if this market or that commodity or even the world wide financial situation is in a bubble, we conclude that there are bubbles all over the place.

Some may pop next week, some may last for years, even the forex markets seem to be defying logic.

Seasoned investors will say that Mr Market is always unpredictable, often flying in the face of even the most proven technical indicators and more often than not contrary to the logic gleaned from the mountain of information and news chucked at us every day.

The more cynical may say that much of the contrary behavior is due to insider activity, particularly in our chosen field of precious metals.

Others may feel that the mountain of money being printed all over the world has to find a home, QED stick it any asset that may produce a return, even if it is not for twenty years or more and hope that in the meantime some other punter with an overstuffed wallet will tempt you into taking a nice profit.

So how does this stock market scenario, with every possible view from outright optimism for years to come to doom and disaster lurking round the corner, play out to the precious metal investor.

All we can say is that the only opinion we have in the shorter term is to keep the faith with gold, silver, PGMs and uranium and their associated markets.


The problem arises that with stock markets in general teetering and unsure of direction, our precious metals will reflect both the upside and downside of stock market movements until a definite long term trend, probably downwards, is established.


Add to the mix that gold and silver in particular, will also be affected by currency movements, and here we are talking the US dollar that could bomb at any time, and buying on the dips becomes a lottery.


However for the short term speculator who is not risk averse and has a knowledge of metals and mining may find the coming weeks a great ride.


Despite the prognostications of the financial gurus we are taking the cynical approach and feel that many of the optimists have a vested interest in talking the markets up, after all it is an accepted fact that brokers commission income is much greater in a bull market than when investors take fright and stay away or hang on to investments made at the top of the market in hope.


Lets never forget that markets have always fallen considerably faster than the speed at which they went up.


The only opinion that we are prepared to share with our readers concerning the short term outlook for precious metals is to be cautious.


Having said that we do not think that if stock markets in general tank that investors locked into in precious metals will end up losers.


Once the stock markets settle down the supply and demand effect will reassert itself, gold and silver will remain in demand particularly from India, China and the oil producers and however precarious the state of world economies may become the demand for nuclear energy will continue to grow for many years.


We hope that our readers will form their own opinions and if you feel like passing them on to us we will be very grateful.


It helps us to keep an open mind and often a viewpoint expressed opens up a new avenue to explore and assess and maybe find a profit opportunity.


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