By: Brian V.

Brian V. — Wed, 05 Jan 2011 19:21:02 +0000

It will be interesting to see the effect of Lunar New Year (LNY) in China and across Asia in general. Industrial buys will need to be placed prior to LNY to lock in sufficient stock levels for when the factories ramp up production upon return from the holiday. The cultural history of the holiday is to pay off all of your debts prior to LNY to protect your prosperity in the forthcoming year. This has kept the Asian economies running for thousands of years. There is also the pay out of Hung Bao (Gift Money) within families and in business structures as well. Lots of monies will change hands, and if the precious metal pricing is inviting enough, there could be an uptick through mid-late Feb.
But look back to last March’s weekly plunge and the relative sleepy summer months to see what may re-occur. I’m not saying silver will drop below $16 on 03/01, but $20 is a possible new low which could play the rollercoaster ride up and down between $22-25 all summer. Then hold on for the 4th qtr ride end of Sept. ’11 – Jan. 2012…Silver easily breaks $40-50, and Gold will surpass $1500 by end of year.
Recent moves over the past 3 years show every time an adjustment happens, it only sets a new low higher than last year’s high point. In my opinion, keep buying during the drop, as it will bottom out and bounce higher than previous year. Make your money in the 4th qtr, and buy, buy, buy.
Gold buyers should note India added 7 more banks to the list of official importers of bullion, bringing the total to 30. These two markets alone have a huge impact on global pricing. Don’t pay attention to the amount of gold China imports as they are hoarding the domestic sources and recycled metal as well. They have so much money tied up in US dollars, they can’t afford a panic to drive down the USD$ levels. So they will show low buys, but keep stashing what they have to build inventory.

Brian V. in NJ

Comments on: Wheels in Motion – Wednesday Kitcommentary

By: Brian V.