Thursday, May 5, 2011

Silver and Gold illusion?

Silver has plunged from 50 dollars an ounce to 36 seven dollars an ounce, it is time to sell? I don’t think so? It is time to buy , yes I think so . I think the floor in the silver is at 35 dls an ounce (who cares what I think?, please don’t care because probably i´m wrong). QE2 (Quantitative Easing 2) has fueled a commodity rise and it will end in June but as the Fed signaled that it will commit liquidity to the market for an extended period of time , I think that inflation is not temporary and as markets endure in recovery mode metals will rise another time.

There is an important psychological factor in silver and gold ; security , investors regard it as a weath preservation vehicle, I think that there are better ways to preserve wealth than gold and silver (Fat dividend yields in good quality stocks).

If the U.S. does not keeps its fiscal policy tight in the next years , the silver could rise , even up to 100-150 Dls range. I am more bullish in silver than in gold because the industrial uses expanded heavily in the previous years and compared to gold is 1/32th it´s price, being a substitute. I think it should trade in the long term at least at 1/16th .

*this article or any of the previous or following ones does not constitutes any investment advice or suggestion.

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