By: James O’Dell
Los Angeles, CA. – Gold and Silver bullion prices are continuing to pullback and consolidate this Wednesday morning as precious metals remain under pressure after a strong rally last month and a report out today that George Soros has reduced his ETF holdings. David Levenstein of Lakeshore Trading disagrees with analysts that the large scale selling was responsible for the drop in the Gold price.
“The underlying fundamentals driving the Gold price remain unchanged, which leads me to believe that the current drop in prices is nothing more than price correction prompted by profit taking by mainly traders on Comex,” says Levenstein. “In all bull markets there are always price corrections, and I feel certain that this one will be relatively short-lived.” Gold is currently trading at $1,514.20 an ounce and investors are buying the dip and preparing for Gold’s next move up as the dollar dropped to a new three year low while its value has dropped to its lowest level in four decades.
Mexico has just joined a growing list of emerging market central banks that are aggressively accumulating Gold bullion. According to data collected by the International Monetary Fund, Mexico has accumulated 93.3 metric tons of Gold since January. When added to its existing holdings, a meager 6.9 tons, Mexico’s central bank now holds roughly 100 metric tons of Gold Bullion.
“Central banks have good reason to buy Gold,” said Peter Morici, a professor of business at the University of Maryland in College Park and a former economic adviser to the U.S. government. “The dollar is no longer a safe asset for backing currencies. Treasuries are not a sound investment” and budget and debt issues mean central banks should buy Gold, said Morici.
“Mexico’s Gold accumulation confirms the demand of emerging market central banks to diversify their reserves,” said Bayram Dincer, analyst at LGT Capital Management. “They will be the big buyers for years to come.” Don’t leave your assets unprotected during these times of economic and geopolitical uncertainty, invest in physical Gold and Silver bullion and protect your wealth in 2011.
