Recent commentaries

The situation of mining stocks is tense because they are very close to their 2008 highs (XAU Index is slightly below the 2008 high and HUI is right at it), and this is the most important technical development that we see right now. Will we have a bigger decline or another huge rally from here? Which of the above outcomes is more probable?

Recent declines in precious metals prices have been clearly seen from a short-term point of view. This may appear scary to some. Note, however, that if price declines are short lived, this means little to speculative long positions. Also, please keep in mind that in the past none of the major upswings ended in a consolidation pattern, which makes it less likely that the rally is completely over now.

With the possibility of a hyperinflation scenario a sudden plunge in gold appears unlikely. Yet, some Investors and Traders believe that we just seen a breakdown in gold and that one should sell their gold immediately. Was that really the case this week?

The Bull Run in gold is already showing signs of fatigue. After such a positive 2010, one might expect gold to consolidate somewhat through 2011and gain at a slower pace. Investors should remain cautious and wait for appropriate signals before another leg of the bull run resumes. Silver too will remain subdued, but at these elevated levels with good support from industrial and investment demand. As both the legs of the ratio gain steadily, the gold:silver ratio will remain largely range-bound.

Gold prices tend to rise it times of projected or actual inflation rises due to the bullion’s status as a "safe haven" asset. Investors who are seeking an asset that reacts favorably to currency devaluation and inflation typically move some of their wealth into gold. Right now, the Fed is more concerned about deflation rather than inflation. As such, they show little reluctance to flood the US economy with dollars.