Geopolitical Events Controlling Gold and Silver

In this issue:

• Geopolitical Events Controlling Gold and Silver

• Investment Ideas

We wanted to see how the markets opened today in the U.S. and Canada before coming to you and here is what we see. 

As of Monday February 21, 2011 the Egyptian Government has changed entirely and is leading to a boiling over of the desires expressed in that country to spread like wildfire throughout the region.. Yemen, Bahrain, Libya, Jordan, Tunisia, Morocco, Iran, and others that have yet to be highly publicized are following in the desire to acquire the same advancements as their neighboring country just accomplished. This will more than likely begin a push into the Gold and Silver markets as indicated by the relative flat line of the global currencies yesterday coupled with the extreme rise in the values of both Gold and Silver, the ultimate flight to safety. 

Most wealthy individuals within these environments are seeking to remove their assets out of a currency based value and back to the safe haven of the metals that will prevent their current valuations being eliminated in the vacuum of the governments which are now in question. This is very likely the reason we did not have a correction as previously thought and why we might have reached an unforeseen rally currently unfolding which has yet to show any indication of an end in sight.

In light of these geo-political situations unraveling in real time we wish to address and clarify both the nature of the previous “caution flag” and the current situations which could indicate the beginning of an un-predictably yet obvious turn of events.

The “caution flag” that were previously raised was never intended to cause any investor to liquidate and hop out of the “game” or it would have been more accurately been titled a “red flag”. A core position should always have been maintained. 

We believe the indicators and forecasts, as well as, many top analysts insight gave very good reason to expect a correction or at the least a temporary pull back in the rise of most commodities even if only short term… The caution was intended to raise a general awareness as to what the indicators were predicting and serve as a level of awareness that should be observed even when the markets are performing well and a sound decision to raise some cash up to around 25% of your portfolio.

Then came Egypt, and within that blink of an eye the retrospective view is one that can only assume the events in Egypt that occurred prevented the correction that was overdue thereby creating a new dynamic that occurs in the presence of political unrest that currently is continuing to unfold.

The situation now makes it important to take a new pulse and reassess  current and future positions and our belief in what is going to, as well as, what we would like to see happen.

Rarely in life do we get exactly what we want and as you know we were expecting and ‘hoping’ for a decline in gold, silver and the resource shares giving us an incredible buying opportunity. Is it still right in front of us? Possibly.  

As you recall, we had a date of February 18-19 which we were following for months which was on target to present us with highs in gold.

Over the last few days and the trading yesterday (even though the U.S. and Canadian markets were closed), gold and silver have exploded upwards with silver the strongest and hitting 30 year highs.

Overnight and this morning the markets are experiencing a pullback and only a little more time will tell us if this rally was for real or whether the February 18-19 dates have signaled at least a short term top.

As of 9:15AM, CST, gold has backed off $9 and silver is off over $1.00.

Is the party just starting? Frankly, we think it is too early to tell.

It could be a very real assumption that no correction will take place in light of the Geo-political events and the demand for Gold and Silver will surpass any previously predictable paths as only political unrest can do. With 1 country, however, with 5-10 countries that volume could reach an explosive level. We believe the event in Egypt could have redefined a new bottom and the party just began to turn into an incredible opportunity to ride this bullish wave much earlier than anticipated.  

The “caution flag” is still waving but from an adventurous perspective amidst political climates and global demands. Pay attention, be vigilant, we will continue to keep our pulse on the situation and invest responsibly, professionally, and adventurously. 

Let’s give these markets a few more days to settle down and we will be back with you.

Investment Ideas

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Dudley Pierce Baker – Owner/Editor – Guadalajara/Ajijic, Mexico
Bruce Ross – Webmaster and Administrative Assistant – Phoenix, USA

Jeff Baker - Assistant Editor and Administrative Assistant, El Paso, USA

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