Gold and Silver Market Update

July 21, 2010

Timothy Silvers

          It’s been months since my last update and I’ve been sitting in cash since the end of last year. Mostly I’ve been trying to understand how economic and political changes will likely affect the investment climate in the next several years. I’m still convinced that a foundational allocation of precious metals is important in these uncertain economic times. Many hard money analysts are sure that hyperinflationary times are just around the corner. However, I’ve read quite a bit of analysis that indicates that deflation could be a bigger near term threat. The jury is still out on which of these forces will take the upper hand and how that will play out in the short, medium and long term. Gold bugs can take heart that gold is one of the best performing asset classes during deflation, believe it or not. David Morgan published an excellent report on that in March 2009 and it is a must read, in my opinion.

          Hindsight being 20/20, I was quite cautious in February and missed a nice tradable bounce in the metals. There have been quite a few tradable ups and downs in all the markets, if you managed to consistently get in and out. Those moves have been quite unpredictable, and I haven’t been in a gambling mood, so I’ve been waiting for a new clear trend. Gold has managed a steady uptrend with corrections since April of last year, but silver doesn’t look much different now than it did in December. Gold rebounded from the February correction to hit new highs but was firmly stopped around $1265. Silver had a nice rally during the same period but didn’t make new highs. Silver is now sitting on critical support around $17.50. Should that be broken decisively, it would likely mean a better buying opportunity later in the summer. Gold so far has tested $1175 briefly and held support. We should see in the next few days whether or not these supports hold for gold and silver. I wouldn’t get too excited about a resumption of the bull trend in the PMs until gold can get back above $1220 and silver above $18.50. Summer is typically a time of correction and consolidation for the metals. I’m content to wait patiently and see if we get a better buying opportunity.

Best wishes on your investing and future and God Bless,

Timothy Silvers

www.silverbrothers.com

 

Disclaimer: This article represents the opinions and personal views of Timothy Silvers and is not intended to be investment advice. If you choose to use this analysis for your personal trading, Timothy Silvers assumes no liability for the direct or indirect losses you may incur due to using this article to make your investment decisions. You are totally and completely responsible for your own investments. At any given time, Timothy Silvers or his friends and relatives may have positions in silver related investments that may or may not follow the recommendations contained in this article. The information in this article may not be completely correct and accurate. Even though Timothy Silvers has done his best to review the content and accuracy of this article, he is in no way liable or responsible for any mistakes or omissions.