Precious Metals

April 15, 2013

Precious metals: Really sell-off or start a short squeeze?

The market for precious metals is since a few days literally in free fall. Some gold bugs should run down the sweat pouring down his back, after all the support lines are penetrated like a piece of butter with a hot knife. In fact, the movement does finally back with the news agree this was not the case for a long time. The price of gold is not created at the counter of Gold dealers such as Pro-Aurum but by paper, such as the London Bullion Market (LBMA). At the moment, the question arises whether there is actually a final sell-off run or a short squeeze is pending.

First I would like Frank Meyer of Rottmeyer quote. "No matter when I'm placing an ounce to the scale, it has always 31.1 grams" Of course this is nothing to oppose, but you have to heart to the different feelings and intentions of the "Edelmetaller". There are different reasons for buying precious metals in physical form or on paper.

The life insurer

A group buying the precious metal to insurance against failure of the monetary system, for all those it is irrelevant how to develop the courses, or if you can tolerate the fluctuations stop. There is something uncomfortable obtained leave again, but the ounce remains at 31.1 grams and very likely it can be saved over the coming meltdown of the financial system over. As equivalent to the current purchasing power, there should be no losses and so only a sinking feeling in the stomach remains at the current fluctuations.

The speculator

For gamers, the market of precious metals is actually not so interesting by a permanent increase in the margins of the possible bets and thus potential profits were significantly reduced, so that the risk of loss with respect to the expected income is rather uninteresting. Nevertheless, a situation like this, of course, led to a couple of "short sales" - so-called shorts - use the downward momentum to participate in a little of the falling prices. Each short course placed exerts further downward pressure on prices. But even there, there are physical limits to what we want to come later.

The Hedger

As long as the financial and paper money system is still running, which is actually the option to sleep with the best, however, this option carries the risk - with sufficient mass - to create some downward pressure with it. A calculated amount of warrants, the status quo can own as "insurance". It is a sum which is about 3% per annum of the investment in precious metals corresponds to a to obtain a monetary compensation when prices are falling. This is after less than the devaluation of money in savings accounts by the real inflation. The real gold bugs because only shake his head and reply "but I do not have insurance for my insurance." This is certainly a matter of opinion, and above all, who could possibly be dependent on the amount invested, but is on the safe side.