If you follow any of my postings in the past you know that I have been very bullish on metals for sometime. I first started buying Gold and Silver back in 2001 when Gold was Trading at $268 and ounce and Silver was $3.75-4.25 an ounce. Since then I have been watching the ups and downs and given you my thoughts on where I thought the market would head based on Technical Analysis and Global Economic information.
This past weekend we saw the culmination of many factors finally weigh into the market and Gold shot up $60 an ounce. However, Silver did not move as much as Gold. I was asked earlier today by a very close individual why this was. My thoughts are this. Right now our economy SUCKS big time. We are in a worse position than we were during the 2008 recession. The small investor who would drive Silver prices up can not afford to invest as they are just trying to put food on the table, and make the car payment and utility payments. Flight to safety can only be accomplished if you have disposable income and the average person (American, Chinese, Canadian, European, every "average" person) does not have the resources to be investing heavily right now in anything.
Where is our economy and Gold/Silver headed? Well for the next five or ten years I think the economy will be up/down/up/down. The old fortune "May you live in interesting times" should define the next decade. I think we will enter a second recession, I think it will be worse than the previous and I think the government will not have effect on trying to prevent/pull us out of it because they have already spread their "capital" (political and financial) too thin. I think we will see a Dow of 8500-9000 before long and possibly even lower. I think we will enter into a second "once in a lifetime" opportunity as things change and movement out of US based assets (into Gold and foreign stocks/currencies) will yield double and even triple digit returns. I do not think the time for Stocks of any kind is right now, I do see in the next 6 months - 12 months an opportunity to load up everything you can into Large Global Dominating Companies that will see their share price beaten down with all other stocks, but will be the most likely to survive.
In the past few years, I have literally dumped every last extra dollar into precious metals, precious metal ETFs, stocks, etc. The payoff has been tremendous. I think, we still have a long way to go before it will be time to sell and re-allocate to other asset classes.
With that being said. I can see in the next couple of weeks some positiv"ish" news coming out that will cause Gold to drop $100 in a couple of hours or a day. I think we will see corrections before we are done, but I would not be surprised if we end this year with Gold at 2000, Dow Jones around 8250-8500 (maybe even down closer to 7500 or 7000). Oil should remain somewhat weak, but natural gas should push back up as we enter Fall and push into Winter, especially if we have an opposite extreme of current weather patterns (colder winter compared to our hottest summer). I don't think there is a call for a severely cold winter, in fact, it might end up being a mild winter given how extremely hot we have gotten this summer.
Speaking of Hot Weather. Expect continued drought like conditions for at least another month or so and the start of rolling blackouts.
Take care and stay safe.
As always Standard Disclaimer applies.
Mother
(re-posted from original website 09 27 2011)
