Will tapering and rising interest rates be bad for SLW
Many commentators in the main stream media who can be easily characterized as precious metals bears tell the public that gold and silver will plummet in price if tapering triggers an interest rate rise (after all, who will buy treasuries when the Fed pulls out as a buyer so interest rates must rise to attract new buyers?) And further, rising interest rates is expected to boost the dollar in the world of fiat currencies. Again, many conclude that a rising dollar will cause an inverse reaction to precious metals.
Clive Maund in a recent missive dismisses fears of falling metal prices as a result of tapering. And he makes 2 excellent points. First, back in the 80's when gold reached all time highs, it did so in a rising interest rate environment. Secondly, Maund asks the relevant question as to who would cheer rising interest rate returns when the underlying bonds lose value in direct proportion rising interest. If bond investors become convinced interest rates will continually rise, they will dump their bonds that are losing value. And....how many $trillions are invested in U.S. bonds as well as muncipal and state bonds? Where will this money go? Perhaps this exit money from bonds will seek the safer haven of precious metals as well as the miners' stocks. Go SLV!
Clive is wrong. Equating the fraud perpetrated by the Hunt Bros with rising interest rates caused by Carter's failed diplomacy is like comparing apples and gonads.
Rising rates, increases mortgage rates, kills refi's and the housing recovery, except for a few scuttling through a closing door. It offers more "interest", the idiotic notion that paying you back something for deflating your currency is a worthwhile pursuit. Gold and silver always suffer that headwind and the herd follows.
Gold is in a trading range of about $300, and silver following. The end.
“…First, back in the 80's when gold reached all time highs, it did so in a rising interest rate environment. Secondly, …”
It seems that Maund has told only part of the story. The Hunt Bros. were active back then in cornering the silver market. They make the mistake of getting into futures at the COMEX. So what did COMEX officials do? They changed the rules so that, in effect, only sell orders would be accepted (through exceedingly gross raised margin requirements) sending the Hunts into bankruptcy and silver into the cellar.
When there are criminals controlling what takes place logic and rational decisions based on fundamental economic principles are destroyed as a means to decide the best course of investment decisions.
There are far too many crooks controlling financial markets, and regulators that are no better than the crooks.
By the way, is Jon Corzine (Obama’s buddy and political advisor) in jail yet?
Be sure to re-inspect your crystal ball. It makes no allowances for what the crooks that control markets might do. There are a number of scenarios that could be stated that destroy your conclusions. Only one is mentioned above. These should all be looked at as possibilities so you don’t get fleeced by them.
Hey Hapi! You gotta lighten up a little bit. You're getting way too negative. As far as all that fraud and manipulation is concerned, eventually Mr. Market will have his way. In the meantime, we're going to get yanked every which way. It's a Brave New World!!!
As far as my "crystal ball" is concerned....I've switched to the ouija board and occasionally defer to my tea leaves to give me all the guidance I need. And guess what? I've lost my shirt in the process! LOL