Tuesday, March 07, 2006

Gold and Silver, Virtual vs. Real

Genesis 13:2 (New International Version)
New International Version (NIV)

"Abram had become very wealthy in livestock and in silver and gold."

The last couple of trading days gold and silver lost some synchronization, while both sharply declined yesterday silver quickly based around support but gold drifted lower.
In my opinion a good reason for this could be the real vs. virtual metals issue. As I wrote already a couple of times - I think that Investors preferences are changing at this stage of the Great Global Gold (& Silver) Bull Market (GGGBM or GGSBM). Not all gold holdings are equal, for example a 1 oz gold coin in your hand does not equal 10 GLD shares in your broker account. I have been long saying that Investors (especially small investors) should own physical metals (preferably at home).

Don’t get me wrong , If for some reason your only way to invest in gold is a gold fund then it better then nothing, but If you can choose between 10 gold coins and 10,000$ in a gold fund I will definitely choose the gold coins.
There is much to say about real vs. virtual metals and obviously I cannot cover this entire subject in one day. One more point – It's not black or white it is more like a real vs. virtual scale. So what I see in the market is this: Investors are loosing some appetite for Precious metals stocks and for now they find confidence in buying silver coins. I will soon write more about this issue but for now Silver is set to lead but the out look for gold continue to be positive.

For HUI(AMEX Gold Bug Index) chart click Here

Click on the charts below to enlarge:

gold spot
silver spot

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