Recent commentaries

After an epic size binge comes an epic size hangover and things are not that different in the economy. With the year ending in uncertain times, the one thing we can safely predict is that 2011 will be unpredictable. Let's hope for the best and at the same time be prepared for the worst by holding our physical gold and silver holdings intact.

Although some of the infamous bubble episodes happened years ago, the events are eerily similar to today’s bubbles and busts: low interest rates, easy credit terms, widespread public participation, bankrupt governments, price inflation, frantic attempts by government to keep the booms going and government bailouts of companies after the crash – gold is not plagued by any of these problems despite short-term bearish indications.

Perhaps the uncertainty of the financial stability of several European countries further compounded by normal holiday and year-end influences have thus far made December a difficult month to read. Still, the bias appears to be somewhat negative, even for silver.

The inability of Obama’s administration to collect higher taxes will pose a long-term challenge to the American economy. Quantitative easing and lower tax collection is a recipe for sovereign default.

Short term indicators for precious metals may point to subdued gains, but long term fundamentals are intact. All the factors that have driven gold higher – fear, uncertainties, the Fed’s printing press, lack of confidence in the dollar, gold as the ultimate currency, buying by newly wealthy Chinese families, sovereign troubles in the euro zone, central bank purchases, high unemployment in the U.S. – are still in place and we don’t see any of those factors changing significantly in the coming year.