By Using False and Incomplete Information, You Will Make Bad Decisions About Gold and Silver
May 5, 2011 By
Patrick A. Heller
[url]http://news.coinupdate.com/by-using-false-and-incomplete-information-you-will-make-bad-decisions-about-gold-and-silver-0814/[/url]
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For instance, one of the stories is that
Carlos Slim, the current
richest man in the world, has presold more future gold and silver production
from the mines that he owns. I have not seen one story reminding people that
Slim’s companies last October reported that they had pre-sold 27% of anticipated
gold production through the end of 2013 at an average price of $1,189 per ounce
and 43% of expected silver production through the end of 2013 at an average
price of $18.71 per ounce. Although Slim is apparently savvy enough to own such
mining interests, he is obviously getting bad advice or making poor decisions
on how to maximize his profits in these markets.
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As for the claims that the “bubble” has burst, the quantity of open COMEX
contracts in the gold and silver markets proves that to be false. When a bubble
market starts to tumble, the quantity of open contracts drops sharply. The
number of COMEX gold and silver contracts has only dipped slightly.
I do not know where the current bottom will be for silver, but I do expect it
to reach bottom soon. One theory is that the silver market has touched bottoms
in recent years when the amount of leverage in commodity contracts is only 7 or
8 to 1. If this holds, that would point to $34 as being the bottom for silver.
Another theory is that the bottom will be reached when silver gets down to its
200-day moving average. Right now, that points to a bottom of about $28.00.
Here are just some of the reasons why you should hold and consider adding to
your precious metals position:
- The US government is still running such huge budget deficits that it now
has to borrow 43 cents of every dollar it is spending! - During all of this turmoil, the value of the US dollar has continued to
decline almost every day except today! - US Treasury debt is so unpopular among foreign and domestic investors at
current low interest rates that the Federal Reserve is now purchasing 85% of
all long-term issues! - State and local governments (including public school districts) have not
really done anything to cope with the more than $1 trillion in unfunded
retirement liabilities. - I have not seen the prices of any food products or gasoline
drop by 30% this week! In fact, worldwide food costs are rising at a faster pace this
year than ever before! - (...)
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