Tuesday, May 3, 2011

Silver and Gold pumping iron

Gold in New Zealand dollars: $1919.08 per oz
Previous all time high: $1955.10 per oz

Silver in New Zealand dollars: $54.15 per oz
Previous all time high: $48.58
per oz

According to charts, history can repeat. But to completely base the future on chart trends can make one look like a fool.

Fortunately, yesterday I made mention of how events can scupper any chart bound trend. This is what I said,

"But remember charts only really give you an educated opportunity to see trends, they can never account for fear or weird circumstances, like wars in Libya and a sudden sovereign default on debt."

Well, 'chart-bound-trend-be-scuppered'. Osama Bin Laden was assassinated by Navy Seals and the gold an silver price pumps iron...up, down, up, down.

This morning NZDT, silver is hovering around $43.50 and gold $1545.00. You see, all was rosy when the big event happened. The US dollar rose on the good vibes and people sold some of the 'commodities' like gold, silver and also oil. The world was going to be a better place again.

Until they started to think a little and off went the prices upward again.

But what I find fascinating is not only the psychology of the market world, but the machines behind it as well. On the one hand we have human fear and happiness driving prices and on the other we have machines with computer code that decide when to sell and buy.

Yesterday morning I watched as the silver price fell 11% in a few minutes. Why? Probably because stops had been breached on some mindless computer program and some poor sod had their precious metals sold.

But I guess these idiot computers (GIGO), and fear and happiness, will always be a part of our market. This is why long-term trends are so very important to keep in our minds. Corrections WILL happen to gold and silver prices.

After all, parabolic rises are always a bit suspect. It's likely some investors took some profits off the table yesterday.

However, the only history I see repeating is based on a saying by Voltaire many years ago:
"Paper money eventually returns to its intrinsic value -- zero."

Articles of interest:

China's Trillions in Reserves, Gold, Silver and more

See podcast here
King World News

Never Ending Money Printing

See article here

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