Are we starting to see the beginnings of gold and silver prices dropping again?
It sure does seem that way when looking at the charts for gold and silver. I have written about this earlier – that there is rarely a quick rebound after the kind of action we’ve seen in the markets recently. Prices slowly drifting lower for many months, then a sudden large drop usually means continued weakness. Also, the technical story is the only explanation. The excess stimulus from the worlds central banks is creating a strong appetite for risk since the risk free rate is so low. Money is flowing into stocks and real estate now. The spot, or exchange prices for gold and silver will suffer as a result of this.
Looking at the chart for gold we can see that the recovery, after the $200 drop, has started to loose some steam. We’re still not at a level where we are breaking through support but we seem to be heading that way.
The case is even more evident for silver prices.
With silver we’ve seem to have reached the breaking point this Friday when prices fell by over 4%. As you can see in the graph that puts silver in a very bad position. I wouldn’t be surprised if we saw prices falling further the coming week.
I believe that we will continue to see lower prices for a while for gold and silver but I wouldn’t wait to try to time a bottom myself. That’s close to impossible. Also, with each drop we’ve seen the premiums in the physical market for gold and silver bullion have spiked. That’s because there is an increased discrepancy between physical silver bullion and gold bullion prices – and the exchange prices.
So, what should you do whith gold and silver prices dropping?
The best way to handle this is to accumulate gold and silver continuously. That way you will ensure that you get the best average cost for your bullion.
Without a doubt – the prerequisites for gold and silver still are valid. Before we see the end of this bull cycle we’ll see a parabolic rise in prices similar to what we did in the 1970’s. Don’t try to get on that train when it’s already too late.
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