New Year 1/1/12

We can close the door on 2011.  It was a roller coaster ride that ended almost where it started.  Navigating the ups and downs was a difficult task.  Nothing much was resolved to make 2012 any different.  Most of the problems of 2011 are still waiting to be corrected.  Although Europe was the focal point, much of the world slowed down and is feeling the pain.  Even the BRIC nations show slower growth although still much above the US.
Gold and silver ended the year on a big slide down.  Gold down around 20% and silver close to 40% from their highs.

The gold silver ratio is at 56 which means it takes 56 ounces of silver to buy one ounce of gold.  This is high although it has been much higher.  In September 2008 it was at 84 and the 10 year low was in April 2011 at 31.  Silver is much more volatile than gold because some believe it is more manipulated and because it is a smaller market.  Some traders play this market because they believe the ratio should be smaller meaning silver should go up in price to close the ratio.  We believe that both gold and silver will go up in 2012 and that silver could go up much faster like we saw late in  2011


"The gold price is primarily supported by investment demand. Investors look to gold as a safe haven and the limited supply of the metal could push prices to very high levels in 2012, potentially exceeding $2,000 in the next six months," says Angelos Damaskos, the chief executive of Sector Investment Managers and an adviser to the Junior Gold Fund. 


We agree, however there still could be some down side before we see the big jump.