I'd first like to extend a very warm welcome to our international visitors today from Switzerland, Singapore, Thailand, Zimbabwe, Greece, the Netherlands, Vietnam, South Africa, Canada, and a heartfelt thank you for visiting this blog. I know that the information presented here transcends international boundaries, but it still inspires me to look at my visitors and see so many from all over the world. Truly, we are all in this together, because the making of terrible economic and financial decisions is not the sole domain of the United States. I truly hope that this blog inspires you to prepare for the apex of the unstoppable global financial collapse that we're currently racing towards...
As predicted, gold and silver traded softly today, only gaining 0.16% and 0.59% respectively. A close this week above $1475 in gold and $40 in silver would be extremely bullish, but I don't expect that will happen this week, so we're looking to a Friday close above $1450 in gold and and $39.20 in silver. There's going to be a lot of profit-taking this week with both gold and silver trading at highs, so I expect that we will probably see down days tomorrow and Friday. It's a crazy world though, and with the shutdown of the U.S. federal government looming large on a deadline this week, it's possible that we could see strong upwards movement in both metals on Friday.
A lot happened in the world today, and there's nothing I'd love more than to discuss it all with you right now, but my wife is calling me to supper, so it will have to wait until later.
(updated)
I'm often asked by people who know that I closely follow the precious metals market, "If inflation is such a concern, why doesn't gold just keep climbing? Why does it only move along in spurts?"
There's a very simple answer, and that answer is "buy the dips and sell the tops!"
In any market where there is a great deal of speculation on what the future price may be (such as real estate, commodities, etc), there will always be those who seek to capitalize on short-term gains while minimizing losses. When gold (or silver) trades downwards sharply, some people see this as a sign that the "gold bubble" has finally burst. Other, much smarter people, see this as an opportunity to buy an asset that can only appreciate in the long-term. So, while the weak-hands are being scared off by the threat that the "gold bubble" is finally bursting, the smart money sits and waits... and waits... and waits some more. Then, when it seem like gold has finally reached it's short-term bottom, there is a rush of buying, which of course sends the price right back up as more investors see gold as less-risky. It's basically the "You first!" mentality...
Once the price of gold finally pushes up to where there is an equilibrium between supply and demand (in the past 2 years this has almost invariably been at a new all-time high), it levels off a bit as investors wait for signals on whether they should buy more, or sell. If it looks like gold is about to make another big move upwards, they'll likely buy more. If it looks like the price of gold has pushed up against some resistance, then they'll likely sell their positions and take some big profits. When the price starts to move downwards, more and more investors start selling to try and capitalize on their short-term gains. None of this, of course, matters to us, because we own (hypothetical) physical metals and we'd be stupid to buy and sell these at a 5% premium just to capitalize on 3% movements... But for those who trade in gold and silver futures, this is their bread and butter, so to speak.
That's all for tonight, but I promise (promise!) that the long-awaited (and much asked for) part II of my article, Are Precious Metals Prices Headed for a Major Crash?, will be up by the end of this weekend.
For now, the numbers:
Results upon NY close of trading -- April 1, 2011:
- Gold closed at $1,459.10 per oz, up $2.30 and 0.16% from yesterday. Silver closed at $39.51 per oz, up $0.23 and 1.77% from yesterday.
- VFINX closed at $123.08 per share, up $0.32 and 0.26% from yesterday.
Investment #1, Precious Metals:
- Percent return for the day: 0.38%
- Profit for the day: $381.11
- Total percent return: 1.0%
- Total profit: $977.49
Investment #2, Vanguard 500 Index:
- Percent return for the day: 0.26%
- Profit for the day: $266.88
- Total percent return: 2.7%
- Total profit: $2,693.82
Advantage: Vanguard 500 Index, by $1,749.45
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