With silver down just over 4%, the dollar continuing to grind lower and gold consolidating, today King World News interviewed James Turk out of Spain. When asked about gold and silver Turk responded, “Nearly all of Europe is closed today to celebrate May Day, and Asian markets are notoriously thin even in the best of circumstances. So when the news of Bin Laden's death hit the tape, the dollar bounced in an emotional knee-jerk reaction. Silver was pummeled, and gold ended slightly lower. The important point Eric, is that both metals are bouncing back.”
When asked about the violent action in the metals Turk replied, “The volatility scares a lot of people, which is understandable. It can be heart-stopping to see silver drop 10% like it did, but silver is not unique in this regard. Even blue-chip stocks or other high-quality assets drop in price during certain periods. Unfortunately, those big price drops can easily cause you to take your eye-off-the-ball or shake you out of a position. Don't let that happen to you in a bull market such as we are seeing in gold and silver.
What's worse is that these occasional price gyrations play into the hands of the anti-gold crowd, who claim that gold is a volatile commodity. Of course, the real volatility comes from central bank interventions that distort the market process as well as the huge amount of leverage used in the paper-gold market. The point is, Eric, long-term price trends are caused by underlying fundamental factors that determine the true value of an asset, not news items. And the underlying fundamentals for both gold and silver remain very bullish.
Look for example, at the US Dollar Index, which is trading at a new low as we speak. The trading day just ended, and the "Bin Laden bounce" is already history. (read more)
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