It should be no surprise to readers of ArabianMoney to see gold and silver prices suddenly picking up in the depths of the summer. This is the classic pattern for many years, setting us up for the best season for precious metals prices in the autumn.
There is much to look forward to for precious metal investors. Wednesday’s tip in the Wall Street Journal by Jon Hilsenrath – dubbed ‘Fedwire’ because of his Fed sources – that the Federal Reserve is “moving closer to taking new steps” to boost the economy, triggered the rally in gold and silver.
“Amid the recent wave of disappointing economic news, conversation inside the Fed has turned more intensely toward the questions of how and when to move”, said the article.
“Central bank officials could take new steps at their meeting next week, July 31th and Aug. 1st, though they might wait until their September meeting to accumulate more information on the pace of growth and job gains before deciding whether to act.”
So there we have it from the inside source, we hope. Money printing by the Fed is manna from heaven for precious metal investors. The delay in QE3 is the main reason why the price of gold and silver has drifted sideways since the peaks of $1,923 and $48 respectively last year.
If you take those figures you have the first price target for this autumn and now that this information is in the marketplace the move higher will likely follow much more quickly than that. If ever the old adage “buy on the rumor” applied this is it.
Of course the US economy could spontaneously recover. But that is not what we are hearing at the Agora Financial conference in Vancouver this week. US housing might just be moving off the bottom – although 2.3 million in delayed foreclosures are still to come – but everything else is trending down again.
So do precious metal investors buy now or wait and see if they are sold off in a big financial market meltdown that seems to be approaching fast and October is the traditional month for such events? Well this does not seem a time to be shorting gold and silver and you do have to keep your money safe somewhere.