Gold price and silver market update: beginning of August 2012

This article provides a short summary of the weekly “The Delaire Report”, by David Levenstein from Lakeshoretrading

Gold price update

The price of gold is holding $1600 an ounce as a key support level, despite the absence of additional monetary stimulus in Europe and the US. Although Mario Draghi, head of the European Central Bank, announced at the end of July he would do everything to preserve the euro, there are no concrete actions confirmed yet.

In the US, the Fed Chairman acknowledged during the FOMC meeting at the beginning of August, that “economic activity decelerated somewhat in the first half of this year.” Interesting fact to mention: only one week earlier, Mr Bernanke stated that Operation Twist was “effective in easing financial conditions and promoting strength in the economy. Large-scale asset purchases have “also contributed to economic growth.”

General economic data are worsening on a global scale:

  • Unemployment in the Eurozone reached the highest level since the euro was introduced.
  • China’s official PMI manufacturing dropped to the lowest level in 8 months.
  • UK PMI manufacturing dropped more than expected in July.

David Levenstein concludes by stating that it is vital to own gold and silver as the economic problems are worsening: “You must add physical gold and silver to your investment portfolios.”

Silver market update

The continuing imbalance in the supply / demand equation in the silver market is not changing in the foreseeable future. Demand keeps on growing mainly because of the increasing usage of silver within a large range of products. Not only electronic devices like smartphones / iPads / TVs / etc need silver, but also whole sectors like healthcare rely more and more on the metal as a necessary component. On the other hand, the supply side remains in a downtrend. “Inventories have fallen 92% since the start of the 20th century” writes David Levenstein.

In the meanwhile, the research against the silver manipulation reached the mainstream media. The Financial Times wrote recently that the four year investigation against the manipulation of the silver price could be dropped.

David Levenstein believes that “it is a matter of time before the price of silver will adjust to reflect the true underlying supply and demand fundamentals” … so “use these low prices to accumulate silver bullion.”

More info in the weekly “The Delaire Report”


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