The recent news that the IMF would be holding more gold sales and the sudden increase in the discount rate by the Federal Reserve Board should have dented both gold and silver, however, these events made little impact on the precious metals as the above chart demonstrates.
We expect the gold to be absorbed quietly and no doubt we will be informed after the event as a large player, such China or India as they continue with their own acquisition programme. The increase in the discount rate isn't much more than sabre rattling as the Fed don't have too much room to move in this area as the economic recovery is still fragile. To be aggressive with rate rises would most certainly bury the recovery. Also weighing heavy on the minds of the powers that be is the possibility of a double dip recession which we see as being on the cards if we do not tred very carefully at this juncture.
Back to the PMs, the thing that interests us is the strength that they have shown at this time despite these two events and it bodes well for the immediate future of both gold and silver. So we will stick to our expectation that gold will push on and challenge its previous all time high in the near term and surpass it on its way to $1400/oz or so.
We see this as a time to get into position and not a time to sell any of your core holdings and yes there will always be detractors and without them we would not have a market.
All the best.
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