MCX Tips | MCX News Gold Goes Low

Gold edged lower Wednesday mainly on weak economic reports from the US while a rebounding dollar also hit the precious yellow metal.


Spot gold was seen trading at $1540.81 an ounce at 1.00 p.m Singapore time while US gold for August delivery was at $1542.02 an ounce on the comex division of Nymex.


Analysts said the yellow metal is likely to ease further during the day as euro debt concerns eased while US Fed chairman’s remark on country’s economy might be another aspect to influence its movements.


The Federal Reserve has said it will stop buying Treasuries as part of its so-called quantitative easing program at the end of the month.


The Federal Reserve has said it will stop buying Treasuries as part of its so-called quantitative easing program at the end of the month.


They however said the dollar index, DXY which rebounded from a one-month low hit on Bernanke's comments temporarily affected its appeal.


Meanwhile, spot silver lost as much as 1.2 percent to $36.66, before rebounding slightly to $36.83.


Silver, which leads the precious metals complex with a near 20-percent year-to-date rise, is expected to outperform other precious metals over the long term, as investors may continue to favor its leverage to gold, said Austria-based hedge fund Superfund.


On Tuesday, gold futures fell from a five-week high as European debt concerns eased, eroding the appeal of the precious metal as a haven. Silver futures for July delivery rose 26.4 cents, or 0.7 percent, to $37.046 an ounce on the Comex.

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Reasons For Investing In Silver In This Year(2011)

By Graham Vidler

There is a growing body of evidence, ominous economic indicators and precious metals expert opinion that supports the notion that silver is massively undervalued. If correct, we could be about to see a silver and gold boom of unprecedented levels.

The US Dollar
- The phenomenal printing of money that is being conducted under the banner of Quantitative Easing and the resultant inflation this will cause (even hyperinflation), could trigger a rush to the security of precious metals, driving up the silver price.

The Plight of the Euro
- The massive bailouts that are in motion to prevent countries like Greece, Ireland, Portugal and soon to be Spain from defaulting. Is this just an interim measure to an inevitable collapse of the Euro?

The Scarcity of Silver for Investment
- Only a fraction of the amount of silver is available as bullion for investment. If there is a rush to Silver, the demand on such a small supply will cause prices to skyrocket.

Silver is Being Consumed
- Unlike gold, silver is consumed in many industrial applications, including the ever-increasing boom in electronics. Most of this is uneconomical to recover, meaning global reserves of silver are shrinking. The fundamental economic principle of supply and demand means silver should be priced substantially higher than it is currently.

The China Factor
- With the standard of living on the rise, this increases the demand for electronics and therefore silver consumption. China also represents a phenomenal pool of potential investors, a strategy actively promoted by their government.

- There is a growing body of evidence supporting the notion that the silver price is being suppressed to maintain confidence in the US dollar, however the resources on hand to enable this to continue are running out. On top of this, the short selling practices conducted by the major banks to influence the silver price will be exposed and the public will demand an end to this practice.

Silver is Grossly Undervalued
- A look back in history at the gold silver ratio shows that in the last 100 years this ratio is way too high and there are no good reasons for this. On top of that, the silver price has not kept pace with inflation and it should be much higher right now.

It is clear that silver is undervalued right now and there are looming economic conditions that simply will not permit this to continue. It is only a matter of time before silver must climb to its true value, as it has done time and time again throughout history.

For this reason alone, buying silver represents and amazing potential for capital gains. With the looming instability of the US dollar, silver also provides an excellent medium to protect against currency debasement (through inflation), protecting your wealth.

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