By: Mark O’Byrne – January, 2011
Gold
Gold remains well supported in all major currencies, especially the euro, pound, yen and the New Zealand and Australian dollar. Concerns about inflation, credit bubbles and the growing likelihood that the Eurozone debt crisis will deepen is leading to continuing safe haven demand for gold – particularly in India, China and wider Asia.
Gold is currently trading at $1,369.25/oz
Chinese demand for Chinese New Year remains robust as seen in the record volumes on the Shanghai Gold Exchange and by higher premiums for gold bars in Hong Kong and Singapore.
Silver
Silver is even stronger and has risen against all fiat currencies. There are growing concerns that the tightness seen in the small coin and bar market in recent years is spreading into the larger bar market. Sprott Asset Management have warned about the increasing “illiquidity” in the physical silver market and warned of the disconnect between the paper (COMEX and futures market price) and physical silver markets (very key point!!!)
Interviewed by CNBC, Cazenove Capital’s technical strategist, Robin Griffiths, remarked that gold is still in a “linear trend” but eventually will “go exponential” as fiat currencies are “printed into oblivion,” and so not owning gold is “a form of insanity.”
Casenove Capital is one of the oldest investment houses in the world tracing its origins back to the 17th century and the company was founded in 1823. It manages money on behalf of blue blooded clients and is widely believed to manage some of the British Royal family’s wealth.
Robin Griffiths is highly respected. He was chief technical strategist with HSBC for over 20 years and has 44 years investment experience and is considered to be one of the top strategists in the world.
Griffiths said that not owning gold “may even show unhealthy masochistic tendencies, which might need medical attention.”
Silver is currently trading at $28.82/oz.
All Things Considered – John’s Commentary
The two most important points in this article are as follows:
1) The disconnect between the paper and physical market – when they should be following each other. What does the physical market know that the paper market doesn’t?
2) Gold and silver will eventually go exponential – hard to imagine, but it will happen.
Action to take: 1) Consider swapping a portion of your silver assets into gold to take advantage of the low gold:silver ratio. 2) Know that gold and silver may tread water at these levels for a period, but will end 2011 up at least 20% or more – position yourself now.
What to buy: European coins trading at approximately 3.5% over spot and 90% silver at 3% over.
Quote of the day: “No other commodity enjoys as much universal acceptability and marketability as gold.” – Hans F. Sennholz
