Gold And Silver Down...which One To Buy?

Gold and silver will someday separate and go in their own market driven directions, and I do not think I want to be anywhere near silver when that happens. Even though there are positive forces there to move silver up, I'm afraid that when it leaves golds tie to monetary value the initial reaction is going to be downnnnnnn! As far as gold goes, you have to decide if you really believe that gold is moving independently in the marketplace or is being manipulated. I personally am in the camp that thinks that the central banks are manipulating gold to try and keep it's price within certain parameters. They have this game where one bank will sell x tons and another buys it and then lends it back to the selling bank. Makes it look like a lot of gold available and pushes the value down even though it never really made it to the market. Follwing is an interesting article.

Central Bank gold sales excitement!

The fact that the price has held up during this sharp increase in Central Bank sales is nothing short of remarkable and should highlight for even the market novice the underlying strength in the market.
Author: Neal Ryan
Posted: Wednesday, 06 Jun 2007

If there really was ever any doubt about the tail (physical gold trading in London) wagging the dog (gold paper markets across the rest of the world), the recent excitement about all of the central bank activity in the gold market has again proven that indeed the gold market is moved by the actions of a few and it is paramount to keep an eye on that activity.

1.) The Bank of Spain updated May sales figures this morning and no surprise, Spain sold another 28 tonnes of gold in May after having sold 40 tonnes in March and another 40 tonnes in April. In three months and via an unannounced sales program, Spain has sold over 25% of its total gold reserves into the market. The interesting point to keep in mind is that this might not necessarily be being done to grab the best price...no, this "sales program" which has merited no public comment from the bank could be forecasting a much larger problem on the horizon in the fiat currency of Spain. While we are no expert on the Spanish economy, this fire sale of gold reserves looks much more like an attempt to raise quick cash to solve banking and housing issues rather than a program of diversification.

2.) The 133 tonnes in total sales over the past 3 months has not included the 37 tonnes in sales from the ECB umbrella organization as of yet. Looking at updated figures this morning showing less than 2 tonnes of sales last week by ECB captive banks, that 37 tonne figure has yet to show up in reports. So all told, the gold market in the last 3 months actually digested 170 tonnes of gold sales from ECB banks. We have no updated figures yet on banks outside of the ECB system because they report on a 3-6 month lag.

For a point of reference, even during the Bank of England and Bank of Switzerland gold purge from 1999-2004, no three-month tally during the CBGA has been as high as 170 tonnes of sales into the market. The fact that the price has held up during this sharp increase is nothing short of remarkable and should highlight for even the market novice the underlying strength in the market.

3.) UBS has put out a new research note this morning stating that they see ECB sales reaching the quota of 500 tonnes this year. This has been revised up from the 400 tonnes of sales they had been expecting. Our only thought is will this really matter anymore? The significantly increased sales in a short time period have kept the prices bottled up, but have not satiated demand in the market. If you can figure out what's affecting prices, then it's easy to pin point that during a period of increased bank sales, it is an opportunity to buy. As has been proven after every major set of bank sales in the last decade, the price eventually goes higher after the sales are done.

4.) Now that ECB bank sales and other central bank gold activity has become the issue of the day (we're sure the market will move to something else tomorrow), we think it's time to start asking the hard questions about the gold loan and swap market again. This is the other side of central bank activity that no market analyst will touch with a ten foot pole because it's impossible to quantify and accurately track. If all the recent excitement about central bank sales activity isn't enough to get the average market participant interested in what's happening with the other gold in the central bank vaults, maybe nothing ever will.

Neal R. Ryan is Vice President and Director of Economic Research for Blanchard and Co. Inc., New Orleans, US.

Everything said is possibly true for today. I am thinking of the near future in metals as well as just about any element. I predict that all elements will soon enough be the next target of our mad scientific community. Note how now Diamonds can be produced and the primary thing holding up mass production of that is only the jewlry industry. The old Alchemist of midevil times with their attempts to change Lead into Gold is going to become a reality. Note how now we can already change numerous elements into something else by Neutron bombardments. There is at present just no realy big concern to change something like Aluminum into Platinum but when and if that becomes a necessity it will be done. Our understanding of the atomic structures of all elements is at a fantastic mode presently and changing elements from one to another is just a short time away. When this happens, Gold, Silver, Platinum and many others will be as common as Aluminum. I agree that with present idealology that such precious metals investing sounds great but I just wouldn't want to have a lot of Gold or Silver when someone says "Hey look, someone just made Gold from Lead".
As to China utilizing metals and many other materials, they to will probably be the ones to make the first element transformations. Russia did it with Diamonds so why not China with element transformations?
Of course with the prices of gasoline we should all be looking into investing in buggy whips since horse and buggys will soon be coming back.

Our "portfolio" is pretty modest indeed, but does generate a few dollars every month to supplement our retirement income.

Fact is, the wife bought some gold a couple years ago, and it has been our best income producer.

A few hints

The "boys" buying or selling aka the plunge protection team and the gold surpressor team can paint any chart except for volume
Volume needs two to tango and is a lot more difficult to twist

The moment your gardner tell you how great goldmines or gold are prepare to sell

BoerseGoe germany just made available in german and free on registration a 35 pages report of the best shot at one share in 2007
by I guess a hundred or so investment lettres from the US

A gold mine was recommended 3 times ( 3 different mines )
One silver mine was recommended
From the 4 recommendations 2 came from the ADEN sisters

I rest my case for this year

Anyway what is goldenrod ? A bike , a guitar, an unmentionable ?

A flower, or a weed depending on your preferences.
Jim

I feel gold is the way to go.

What does everyone think of platinum these days?

Oh yeah and Golden Rod is also a medicinal herb.

I'm investing my extra $$$ in Silver.