Gold and Silver Falling Despite Bullish Fundementals

By: Mark_OByrne

Gold and silver both fell some 3% last week despite increasingly bullish technicals and fundamentals. Risk appetite remains high as seen in equity markets onward advance in the face of falling earnings and latent risk. Yesterday gold and silver soared as US stock markets opened and eked out strong gains of 1.8% and over 4% respectively, erasing last week’s losses.

The dollar was marginally lower for the week and fell sharply yesterday. The dollar could be on the verge of the next stage of the dollar bear market after the recent bear market rally. 10 Year Bond prices fell very sharply last week and yield surged by nearly 6% to 3.174%. Yields fell marginally yesterday but remain near recent highs which does not bode well for the dollar. The sheer scale of government debt issuance in the coming months is mind boggling, particularly in the US, and complacency is dangerous in this regard.

Markets will look for guidance from the “stress tests” but some are already skeptical of the value of the exercise and have criticized and dismissed them (such as Warren Buffett). Some see them as little more than another PR exercise that does little to tackle the substantial issue which is the likely insolvency of much of the US banking system.

Buffett warned over the weekend of the reemergence of inflation and this and news of increasing physical demand from mainland China may have led to gold’s surge in prices yesterday. Deflation remains the threat du jour but inflation will in time be seen as the real threat and more astute investors are positioning themselves accordingly.

By Mark O'Byrne, Executive Director

Gold and Silver Investments Ltd. have been awarded the MoneyMate and Investor Magazine Financial Analyst of 2006.

Mission Statement
Gold and Silver Investments Limited hope to inform our clientele of important financial and economic developments and thus help our clientele and prospective clientele understand our rapidly changing global economy and the implications for their livelihoods and wealth.
We focus on the medium and long term global macroeconomic trends and how they pertain to the precious metal markets and our clienteles savings, investments and livelihoods. We emphasise prudence, safety and security as they are of paramount importance in the preservation of wealth.

Financial Regulation: Gold & Silver Investments Limited trading as Gold Investments is regulated by the Financial Regulator as a multi-agency intermediary. Our Financial Regulator Reference Number is 39656. Gold Investments is registered in the Companies Registration Office under Company number 377252 . Registered for VAT under number 6397252A . Codes of Conduct are imposed by the Financial Regulator and can be accessed at www.financialregulator.ie or from the Financial Regulator at PO Box 9138, College Green, Dublin 2, Ireland. Property, Commodities and Precious Metals are not regulated by the Financial Regulator

Disclaimer: The information in this document has been obtained from sources, which we believe to be reliable. We cannot guarantee its accuracy or completeness. It does not constitute a solicitation for the purchase or sale of any investment. Any person acting on the information contained in this document does so at their own risk. Recommendations in this document may not be suitable for all investors. Individual circumstances should be considered before a decision to invest is taken. Investors should note the following: The value of investments may fall or rise against investors' interests. Income levels from investments may fluctuate. Changes in exchange rates may have an adverse effect on the value of, or income from, investments denominated in foreign currencies. Past experience is not necessarily a guide to future performance.

All the opinions expressed herein are solely those of Gold & Silver Investments Limited and not those of the Perth Mint. They do not reflect the views of the Perth Mint and the Perth Mint accepts no legal liability or responsibility for any claims made or opinions expressed herein.

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.