MUNKNEE ON : FACEBOOK   TWITTER
  |   Sign-up for Automatic Receipt of Articles
Your Key To Making Money!
 
Wednesday, October 5th, 2011 | Posted by

Why Have Gold & Silver Been Selling Off? Here’s the Simple Answer

Why have gold and silver have been selling off? The answer is very simple. There is a strong correlation between a strong dollar and weak commodities. The U.S. dollar is no different than anything on earth – it will always follow the path of least resistance. As the dollar grows stronger commodities sell off or become cheaper [- and gold could go down as low as $1,500/ozt. and silver down to perhaps as low as $21/ozt. before this is all over. Let me explain further.] Words: 650

So says George Maniere (www.investingadvicebygeorge.blogspot.com) in edited excerpts from an article* which Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!), has further edited ([ ]), abridged (…) and reformatted below for the sake of clarity and brevity to ensure a fast and easy read. The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Please note that this paragraph must be included in any article re-posting to avoid copyright infringement. 

Maniere goes on to say, in part:

Take a look at the chart of the dollar below. 

 

In late August – early September the FOMC initiated “Operation Twist” – a plan that [will take] the money that is maturing from the short-term bonds the FOMC had bought during QE2 and rolling it into longer 20 and 30 year treasuries that carry a higher yield. This [has] caused the dollar to grow stronger because the yields on longer treasuries are higher. 

Who in the world is currently reading this article along with you? Click here to find out.

 With any investment the old saying is “no risk – no reward.” However with treasuries that have a strong yield there is not the same risk as there is with equities or commodities. The price of equities and commodities fluctuate but with treasuries you are assured that there will be no fluctuation in price and the yield will remain the same. Why would you buy an equity that would yield the same as a treasury and have the risk that the yield could be lowered or the price of the equity go down if the company had a bad year? With treasuries you are buying surety and comfort.
 
I would like to take a look at two commodities and show how the stronger dollar has impacted their price.
 
 
As we can clearly see from the chart [above] of the spot price of gold, as soon as “Operation Twist” …began the dollar grew stronger and the hedge that gold had served against the weak dollar sold off. There was no need to hedge a weak dollar because the dollar was strong.
 
A look at the chart of silver [below...] look[s] almost identical to the chart of gold. When “Operation Twist” was instituted the dollar grew stronger and silver sold off. There was no need to hedge the dollar with silver.
 
 
 
…I do not believe gold will go much lower than $1,500.00 an ounce. Silver, however, despite being a hedge against the weak dollar, also has industrial uses. If the economy continues to weaken silver could fall as far a $21.00 an ounce. I am certainly not saying that you would be able to buy silver for $21.00 an ounce. There would be margin hikes from the sellers and [I am of the impression that many distributors would... sit on their stock until the price of silver goes back up...

 
I believe that silver will one day be worth more than gold. I believe that silver is incredibly undervalued. While this sounds like an outrageous claim, silver is actually rarer than gold. This is because silver has industrial applications and every day our technologies will require more and more silver to operate. Silver that is above the ground has been diminished by 91% since 1980, while the stockpile of gold has grown 600%...- and gold could go down as low as $1,500/ozt. and silver down to perhaps as low as $21/ozt. before this is all over. This may be the last chance we will ever get to buy silver at these prices.
 
*http://investingadvicebygeorge.blogspot.com/2011/10/strong-dollar-equals-weak-equities-and.html
 
Related Articles:
 

What’s going on? If gold is the great anti-asset, the thing to hold when everything else is in collapse why is it now trading…[below $1,700 and] not $2,000? Words:1147

 2.  Marc Faber: Gold Could Fall to $1,100 “We overshot on the upside when [gold] went over $1,900.We’re now close to bottoming at $1,500, and if that doesn’t hold it could bottom to between $1,100-$1,200.”
 
3.  Chris Vermeulen: Gold to Rebound to $1,775 by Year-end  A few weeks ago (August 31st) I wroteabout how gold was starting to top and that everyone should expect a very sharp drop to the low $1600 area… [and] only three days later gold topped and it has not stopped falling since. At that time [however]…gold was still building the top pattern so I could not say how long a recovering would likely take nor did I know exactly when to re-enter a long position but now that we have seen how gold arrived at my target price I can form a new forecast. Words: 1078
 
4.  Goldrunner: The Gold Tsunami Wave Cycle The Gold (and Silver) bull continues to closely follow the giant wave formation of a tsunami.  The recent more parabolic rise in Gold up to above $1,900 is analogous to the little ridge of water we first saw way out in the distance, and now, much like when the waters recede from the shore early in the tsunami wave formation, Gold is undergoing a correction. Words: 1557
 

Goldrunner: a Gold & Silver Tsunami is Approaching – Fast! A tsunami doesn’t start with a bang, but with a whimper.  The first sign is a little hump in the water way out in the distance that is barely notable.  Anyone who catches a glimpse of it simply continues to expect the day to be the same as the last many days – calm and beautiful waters along the shore.  This is the point where we are, today in the Precious Metals sector. Many have seen the little roll of water out in the distance as Gold edged up in the first move of a more parabolic slope, yet most investors are mired in the same expectations of yesterday – a return for Gold to correct down into a lower base. Our analysis based on the fractal relationship to 1979  shows, however, that the mid 900s are a realistic target for the HUI by the end of the year or early in 2012; that $52 to $56 should be achievable for silver, with $58 to $62 as real possibilities; and that Gold should go the $2250 level followed by $2500 with the potential for $3,000, or a bit higher, now on the radar screen. Let me explain why that is the case. Words: 2130

6.  Have Faith: These 140 Analysts Believe Gold is Going UP to at Least $3,000!

155 analysts have gone public, to date, in maintaining that gold will eventually go to a parabolic peak price of at least $2,500/ozt.+ before the bubble bursts. Of those 155 a total of 140 believe gold will reach at least $3,000/ozt., 101 see gold achieving a price of at least $5,000/ozt. and 20 maintain that gold will reach a parabolic peak price of $10,000 per troy ounce or more. Take a look here at who is projecting what, by when and why. Words: 832

7.  Gold Will Drop to $1390 By Year-end & $1000 by 2013! Here’s Why

A review of the gold price written by Robin Bew, chief economist at HSBC Bank, proposes that the gold price isin danger of entering bubble territory and predicts a sharp correction by year-end to $1,000 per troy ounce by 2013. [Let's examine Bew's views more closely.] Words: 725

8.  Aden Sisters: Buy Gold NOW as it Corrects on its Way to $2,000

When you just consider the downgrade of U.S. debt, the jobs problem, the housing situation, the European bankconcerns and their debt crisis, the negative outlook for the global economy, not to mention that the Fed will likely seek new measures to help the economy, we just don’t see gold coming down any time soon, other than having a normal downward correction [as currently is the case. Let us show you why.] Words:  1102

9.  Why Does Gold Fall When Financial Crises Worsens?

Why is gold  falling as the financial crisis worsens? After all, isn’t gold some sort of safe haven? [Let me explain.] Words: 605

10.  Peter Schiff on Gold: Don’t Look a Gift Horse in the Mouth!

Following the crowd has never been the reason to buy gold. After all, that same logic would have recommended buying a house in Phoenix five years ago. Since the fundamentals still point to gold’s long-term viability… why are investors responding by selling gold and buying dollars and euros? I was always told not to look a gift horse in the mouth… so take advantage of the dip. Words: 880

 
 
 

Related Posts:



Short URL: http://www.munknee.com/?p=28464

The views expressed herein are the views of the author exclusively and not necessarily the views of munKNEE.com or any other munKNEE.com authors, affiliates, advertisers, sponsors or partners. Notices

Posted by on Oct 5 2011, With 0 Reads, Filed under Gold/Silver, Investing. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.
Precious Metals Warrants

COMMENTS

To post a comment, you must login using Facebook, Yahoo, AOL, or Hotmail in the box below.
Don't have a social network account? Register and Login direct with our site and post your comment.
Before you post, read our Comment Policy - Legal Notice


Comments Closed

Comments are closed

 

WHAT'S HOT

  1. Vanadium: An Infrastructure Essential With Major Potential Use in Energy Storage and Green Energy
  2. Canadian Oil Sands: World’s Single Largest Petroleum Resource and…
  3. Bonds Are NOT a Safe Place to Be – Here’s Why
  4. With Options So Limited Where Should We Invest?
  5. This New ‘Peak Fear’ Indicator Gives You an Investment Edge
  6. Taxes on “Rich” Vary Dramatically by Country – Take a Look
  7. Gold/Silver & Mining Stocks Going From Their Cycle Bottoms to Parabolic Peaks by 2015
  8. Is This Surge In Gold a “Dead Cat Bounce” or a “Flight to Safety”?
  9. MedX: An Investment to Enhance Your Wealth – and Your Health
  10. If You Don’t Think Gold IS a ‘Safe Haven’ Then You Don’t Know the Meaning of the Term!
  11. The U.S. May Engineer A “Soft Default” – Here’s Why and How
  12. Is a Plan Afoot to Introduce a New Dollar to Repudiate America’s Piles of Debt and Derivatives?
  13. U.S. Financial Crisis Makes Future Rioting In The Streets An Almost Certain Outcome! Here’s Why
  14. The Bottom Is Not In Yet For Gold Or Gold Stocks – Here’s Why
  15. Youth Unemployment: a Looming Societal and Economic Problem That Will Adversely Affect Us All
  16. Will U.S. Gov’t Eventually Mandate that ‘x’ % of IRA/401K Funds Be In Treasuries?
  17. Gold Will Drop to $1,450 This Month Before a Parabolic Move to $3,950!
  18. Which Is a Better Buy These Days: Physical Gold or Gold Mining Stocks?
  19. What Will the Financial Repercussions Be If Greece Defaults or Leaves the Eurozone?
  20. Stephen Leeb: Precious Metals Investors Need to Hang in There!!
  1. better dream app: You are in point of fact a just right webmaster. The site loading velocity is amazing. It seems...
  2. Jay: HYPERINFLATION OR DEFAULT? On numerous occasions I have read where respected economists and pundits have stated...
  3. Hansa Junchun: The author’s scenario has been played out in 100 countries in the last two decades. But these...
  4. John Galt: I am glad that you are gloating Mr. Grant. Our turn next time when the dollar and the pound will collapse....
  5. Airborne 71: The Author states that no other currency is in circulation and this is true , However , also in the mix...
US


DISCLOSURE: It is our intent that all posts on this site be in accordance with the requirements, restrictions and terms of the Copyright Law of the United States and all other copyright treaties to which the United States is party and more specifically of the Digital Millennium Copyright Act - Blogger . As such, all posts on this website have been screened at Library of Congress Catalog as to their eligibility for posting. Should any post be deemed to be inadvertently in contravention of these Acts' terms please advise with substantiation of such apparent contravention (i.e. registration number) and the article in question will be immediately deleted from the site. Also, visit U.S. Code 17-107 Limitations on Exclusive Rights - Fair Use
FAIR USE NOTICE: This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of financial, economic and investment issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner.
COPYRIGHT & DISCLAIMER: Lorimer Wilson and Johnny Punish are not registered advisors and do not give investment advice per se. The articles to be found on the site are expressions of opinion only and should not be construed in any manner whatsoever as recommendations to buy or sell a stock, option, future, bond, commodity or any other financial instrument at any time. Please consult with a qualified investment advisor who is licensed by appropriate regulatory agencies in your legal jurisdiction before making any investment decisions, and barring that, we encourage you confirm the facts on your own before making important investment commitments. The information on this site was obtained from sources which we believe to be reliable, but we do not guarantee its accuracy. None of the information, advertisements, website links, or any opinions expressed constitutes a solicitation of the purchase or sale of any securities or commodities. Please note that while Wilson and Punish may already have invested or may from time to time invest in securities that are recommended or otherwise covered on this website they do not intend to disclose the extent of any current holdings or future transactions with respect to any particular security and, as such, you should consider this before investing in any security based upon statements and information contained in any report, post, comment or recommendation you read on the site.