Empire of Dunces

Neoreaction

Volatility

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There is no need to get nervous about the latest price swings of gold and silver right now. There is considerable volatility in the markets, and we will experience such swings for some time to come. The fact of the matter is that prices do not move up (or down) in a straight line. With silver and gold there is the additional problem of massive manipulations by central banks, and institutional investors such as JP Morgan and HSBC in particular, both of which have been holding substantial short positions on silver for decades already. But one cannot fight the market forever. Especially Asian investors are greedily gobbling up the precious metals, like there is no tomorrow. The price ratio of silver to gold has historically (and by that I mean since Biblical times(!), since we have extensive historical price documentation) been about 12-1. In the nineteenth century up to 15-1. Currently, it is closer to 54-1. That is not only unprecedented, but also not maintainable. One of the two has to give. Either gold has to fall, or silver has to rise. Drastically. Knowing the way I think, you can probably figure out which of the two I am going with here…

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Written by gloege

November 17, 2010 at 18:54

Posted in Uncategorized

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