Friday, May 23, 2008

Precious-Metal Bubbles About to Burst?

Lingering too long in any run-up can be dangerous as you many well know if you were caught in the tech or housing frenzy. While precious metals aren't yet in dangerous territory the rapid price increases may indeed be slowing or over.

Gold has recently been hovering at close to $1000 which is markedly up from the $300 an ounce gold sold for in 2002. While gold has always been seen as a hedge against inflation, it has little use beyond jewelry. Consumer sentiment is the main price mover when speaking of gold. With supply and demand steady so also remains gold's price. The weak dollar, rising inflation fears ans real estate collapse has driven the price of gold to record highs. Gold surrogate volumes continue to rise indicating investor agreement. Gold will not blow up but will continue to correct as the dollar regains it's strength.

Silver's value has nearly quadruples since 2004. Much faster tahn gold's increase but gold and silver don't generally mimic each other. Silver's use in industry causes silver to be a more accurate reflection of the overall health of the economy. Silver tracks stocks more closely than gold. Silver isn't in bubble-land; it's just not a great buy.

In addition to buying your unwanted precious metals did you know we also evaluate and purchase your fine jewelry?

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