Tuesday, April 16, 2013

SIlver and Gold "paper" market get hit hard

I know many people in the bullion market that feel as if the rug was just pulled out from under them. I think it is easy to see how people who do not fully understand what just happened can feel down and out. The truth of the matter is that the paper market was the only thing effected. Much like investing in stocks you do not post a gain or loss until the point at which you sell. Many like minded people only thought of this drop as a great time to add. I fall into this camp. The money printing from central banks continues at an ever more rapid pace and the growth in global economies are slow at best. It may be hard to pin down the exact reason for the decline. Many claim that big banks have large short positions in gold and silver. Others claim that a large bullion investor or investors got a margin call. Whatever the case may be. The fact still remains that demand for the physical bullion has been stronger than ever. Major Bullion dealers and even the smaller sellers have all but sold out of current stock or have long wait periods due to high demand. The decoupling between the paper and physical markets could not be wider right now. The recent news regarding barrick gold and Rio Tinto should if anything fuel a surge in bullion prices as less production will be hitting the market in the future, but as many know markets are often no rational. It is my opinion that we are getting very close to forming a bottom in price on the paper market and the window for these prices is closing.