Tuesday, April 16, 2013

Is Gold and Silver Still a Buy?

Earlier in February this year, I wrote a short post on whether it was the end of the gold bull run.  Of course, I couldn't say for certain that the bull run in gold was going to end.  After all, there are renowned investors out there who were still bullish in gold for the long term.  I wrote a more balanced post on some reasons to buy gold or silver.  After all, investing in gold is something that most serious investors will consider doing as part of their asset allocation.

For those who have been monitoring the gold and silver spot prices, you should be aware that gold and silver prices dropped drastically in yesterday's trading.  Gold ETFs like SPDR Gold (Ticker: GLD) fell by almost 10% in a single day with hedge funds rumoured to have started the huge sell off.  Well, a correction was more or less expected since billionaire Jim Rogers (who now lives in Singapore) said that a correction was due. In fact, Jim Rogers believes that gold prices will head towards US$1200/oz. He will probably start buying at that level.

But is this more than a correction?  Because it seems that we are now in a bear market for gold and silver.  Worries about inflation in the United States with all the money printing through the quantitative easing programs seems to be unfounded.  Inflation remains low to this day.  And besides, the stock market has been roaring on for quite a few months.  So investors in gold and silver have probably missed out on the bull run in the stock market and are taking the opportunity to liquidate their holdings since the supposed dollar crisis/crash has failed to occur.  Many traders probably closed their positions too especially if they bought at the highs of US$1800-$1900/oz.

Is gold and silver still a buy?  It probably is.  But one will probably have to wait for the right price.  And also be reminded that unlike stocks, gold and silver do not provide any form of cash flow or dividends.  It is almost simply a store of value and a hedge against hyperinflation or "catastrophic" events.  Could this be the reason why Warren Buffet is negative on gold?





3 comments:

  1. The correction will still continue, but long term, I still like gold.

    Do check out my blog, SG Web Reviews (www.sgwebreviews.blogspot.sg)

    ReplyDelete
  2. I am still stacking both gold and silver. Actually more on silver.
    Well, the price may still go lower. No one will actually know.

    Probably Stacking is addictive.

    Thanks for the article.

    ReplyDelete
  3. Gold is currently not a good buy at this very moment because as you can see, gold continue to be bearish and there is no changes in the movement after it was being reported. Though some still believe that gold is still a good investment. You can check binary options affiliates www.binaryoptions-affiliate.com to see if the gold movement has changed.

    ReplyDelete

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