Market Update and New Opportunity

August 18, 2009

          Since I took profits on my trading positions on 7/28, silver staged another quick rally up to $15 and has recently pulled back to its 50 day moving average. Gold rallied less strongly, failed to make it through resistance around $970 and is back down near the lows at the end of July. Is this another good time to buy or an indication of more downside to come?

          The short term volatility in the market has been very hard to predict lately. I admit I was surprised by silver's strong rally at the beginning of August, but that rally was in sympathy with the surge in general stock markets and especially oil. A general correction began on Friday and was preceded by overly optimistic investor sentiment. Any piece of good news, however faint, has been marked as evidence that the recession is ending and the long awaited recovery is just around the corner.

          Looking at the data objectively, it is possible that we will see positive GDP in the 3rd quarter, but that is not the same as a sustainable recovery. There are a multitude of data that indicate the housing market will continue to drag, possibly for several more years, especially in the middle to upper price range. The number of foreclosures is growing and two-thirds of real estate transactions now are some kind of distressed sale. That is not the sign of a healthy market. The number of unemployed is growing...unless, of course, you stop counting those who no longer receive unemployment benefits. They still don't have jobs and can't contribute to the economy, whether the government includes them in the official headline unemployment number or not. People are consuming less, saving more and paying down debt. This is great for the individual, but not so great for an economy that relied on 70% of its growth from consumer spending.

          I think that we are near the top of a classic bear market rally. Isn't it a little ironic that market commentators talk about the biggest stock market rally since the 1930's, yet fail to mention that those rallies did not last and stocks performed poorly for a decade thereafter? There is the argument that government stimulus money is starting to have some effect and the money has to go somewhere. Likely it will form new assets bubbles; the overall stock market, commodities and precious metals may be the beneficiaries of this new money injected into the economy. However, at some point investors will come to the realization that the rally is not based on sustainable fundamentals and we are likely to see another crash.

          At this point, jumping into the market (stocks or metals) expecting further gains seems much more risky than sitting on the sidelines with cash. I am still expecting that we'll see a better buying opportunity for gold and silver in the next several months. I will continue to provide updates as the market conditions unfold and my subscribers will be the first to know when I am buying again.

          On a personal note, I have been interested in coin collecting as a hobby since I was young. I was recently introduced to an exciting opportunity to earn extra money related to precious metal coins. This opportunity is open to all and you can find out more about it following this link www.numisnetwork.com/silverbrothers and watching the videos and reading about the program. Thanks in advance for your time and consideration.

Best wishes on your future and investing and God Bless,

Timothy Silvers

www.silverbrothers.com

www.numisnetwork.com/silverbrothers

 

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.