Gold and silver take a hit

06-May-2011 I have only been out of the country for a few days and the gold and silver price have both fallen like a stone. The moment you turn your back things turn nasty.

Not that we can be surprised - our recent gains have been extraordinary. Silver has doubled in value in a matter of months not a matter of years. Silver certificates we bought 3 years ago for £30,000 were worth £140,000 just before I left for sunny Cyprus. Anything that goes up that fast has to take a hit at some point and that point arrived earlier this week. If you bought years ago you don't care but if you bought months ago you may be feeling worried.

I am not.

In fact the very reason I buy gold and silver is that I can sleep soundly at night and let the fiat money fiasco do whatever it will do. The US QE2 programme will finish at the end of June. What happens then? If there is no QE3 then everything will go down in price in the short term. Even gold and silver may dip further. You guys know the drill - keep buying on the dips. Yes, yes, yes - you have heard it a million times before but heck why would I change a winning formula.

We are not short term traders. We do not buy on Tuesday and sell on Friday - all of our positions are long term. We are playing the fundamentals with money we can afford to lose if it comes to a push. Sure we don't want to lose money but the gains we seek always have some risk. If they didn't we wouldn't have a spread.

In 2010 I said "These are dangerous times and you can expect the market to behave in a volatile way". So that is exactly what is happening.

Export even more volatility in 2011.

Buy gold and silver - and sleep well.

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