Investment Guide|Precious Metal Investment Expert » profit takers

Platinum Investors Beware!

PreciousMetalInvestment.com — Mon, 18 Jan 2010 16:33:48 +0000

Since the launch the week before last, of the new Platinum ETF (PHPT) trading on the NY exchange, the precious metal has seen some very large gains.

This ETF operates along similar lines to the gold (GLD) & silver (SLV) ETFs traded in the US where they hold physical metal in vaults to the approx value of the money invested in each fund.

It should also be noted that a platinum ETF, again holding the physical metal, has been active and available to worldwide investors where it trades in London. Should platinum investors beware that this surge in price is due to the advent of PHPT and is not backed by prospective demand from the auto industry and the jewelry trade?

Whilst we will find any valid excuse to trade any one of the precious metals we are steering well clear of this temptation.

Silver and gold, in that order, seem to us to offer at this time, better value than any of the others in the precious metal category if for no other reason than they are not dependent upon industrial demand and historically are more acceptable as stores of value than platinum.

If high inflation becomes the order of the day within the next 12-18 months and/or the China bubble bursts as some analysts are suggesting then platinum could fall back dramatically to its price zone of earlier in 2009, that is circa $1000 or less, some hit to gamble on!

We repeat platinum buyers beware, if you are already in maybe now is the time to take profits and see how this scenario plays out.

Gold Is The Only Asset To Stay Steady

PreciousMetalInvestment.com — Wed, 13 May 2009 11:40:57 +0000

Whether the green shoots of recovery have become reality or remain an optimistic illusion, there is no denying that gold is just about the only asset class that has stayed reasonably steady since January ‘08 as the recession gathered pace.

Despite credit tightening, profit taking, central bank sales, the much trumpeted threat of deflation, and anti gold spin from vested interests and analysts that should have known better, the precious yellow metal continues to be the safest play around.

Now the fear of eventual hyper inflation as a result of pushing excessive amounts of new money into global economies seems to have been widely recognised, gold, together with silver, are the remaining safe haven stores of value.

Add the fact that China is steadily increasing its gold reserves at the expense of its huge holdings of US dollars that seem destined to continue to lose value, together with the forecast of a continuing drop in world gold output, begs this question.

Why has gold had such difficulty in breaking out and sustaining a rise into the mid $900 an ounce level?

In the face of all the evidence it does seem likely that a concerted effort by those central banks with most to lose as their currencies plunge in value and led by the U.S. are desperately trying to hold back the gold price. After all gold remains the only realistic measure of a currency’s value.

On a number of occasions gold has risen in overnight trading in Asia and morning European trading only to fall back after New York opens and then firming up after hours.

Today gold hit $928 an ounce at the European open but by midday had fallen $5 to $923 an ounce. It will be interesting to see how the metal trades during today’s New York session, it could be that speculators are getting the message and cashing in on some nice regular shorts.

Despite this it is clear that there remains an underlying strength to the metal and the activity of the last two weeks may now have resulted in a slow but steady move up, albeit with a few dips along the way.

Surely it is only a question of time before the central banks and US government give up their futile attempts to manipulate the market and let gold and silver prices reflect their true value in times of economic uncertainty.

Is Gold a Bubble in Waiting?

PreciousMetalInvestment.com — Mon, 23 Feb 2009 12:35:33 +0000

As expected spot gold pulled back from over $1000 an ounce by Fridays’ close as some nervous speculators took profits off the table before the weekend.

Gold pundits are becoming more and more bullish about the metal with each passing day. It is, after all, about the only ray of sunshine in otherwise cloudy markets.

This raises the spectre of gold bounding ahead of itself as investors of every ilk jump in hoping to outguess the market by getting out at the top with a handsome profit.

Doesn’t that remind you of the bubble scenarios that have been playing out in the last six years? It should! Extreme caution should prevail or, like lemmings leading each other over the cliff, many, and usually those who can least afford it, will lose their shirts if gold is a bubble in waiting.

Actually, we at Precious Metals believe that there is considerable justification in believing that gold will settle, for a very short time somewhere between $1500 and $2000 an ounce before the end of 2010.

By then the ‘green shoots of recovery’ will be showing and then there will be some fantastic profit opportunities for stock pickers as companies with strong balance sheets and necessary products regain their true values.

By the time this happens the world will have a pretty good idea about how bad inflation has become and which major currencies have suffered the most. The outcome of the bailouts and over-worked money printing presses will determine the price that gold will settle at.

The worst the inflation the higher the price will be that gold will revolve around. The unknown factor will be the effect of shift in sentiment away from the metal to more profitable opportunities in the broader market place.

As it happened the political movers and shakers did not have anything much original to say over the weekend, just a rehash of last weeks old news, with the principal item on both sides of the pond being governments intentions about nationalising the troubled banks.

In many quarters nationalisation is still a dirty word, particularly in the UK where previous labour administrations managed to wreck the nations’ finances and industry with wholesale nationalisation a key strategy in their ill-conceived policies.

So has anything changed?

What we expect to see is nationalisation in all but name only. If past experience of political interference in key strategic industries and finance by left wing politicians in the UK are anything to go by, then please let the gods help the USA if Obama and his democrats follow this path to the country’s ruin and eventual oblivion as the worlds’ super power!

European trading this Monday morning has seen spot gold recover from below $982 an ounce to over $990 an ounce, indicative of underlying strength in the price.

There is a reasonable expectation that this week will see the price sustained above the $1000 an ounce level as it gathers strength for a further rise.

Gold Shakes Off Profit Takers

PreciousMetalInvestment.com — Fri, 20 Feb 2009 14:28:09 +0000

Gold climbed to $996 an ounce before settling back to $995 an ounce less than an hour before Fridays New York open.

Having successfully shaken out earlier profit takers, investors could be forgiven for thinking gold is on course to break through to over $1000 an ounce by today’s close.

We always advise caution when a stock or commodity has made significant gains in the short period of a week, as many speculators are reluctant to hold a profitable position over the weekend when markets are closed but while politicians are still active.

Gold has garnered much of its Friday morning strength in Europe as a result of the appalling economic news emanating from Euroland and the UK. This may account for the accepted correlation of the price of gold moving in the opposite direction to the US dollar ‘falling out of bed’.

When the US markets open and if the dollar stays strong, the gold/dollar correlation may come back into play.

If so, it suggests that speculators would be further encouraged to take profits off the table before the close.

We would not argue with those brave enough to be tempted to top up their gold holdings if a dip of $10 an ounce or more in the spot price occurs by the end of trading today.

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