The Abundance Engineer March 2011 - The Perfect Storm

The perfect storm is brewing for Gold & Silver.

Bloomberg has reported that China central bank adviser Xia Bin urged the country to increase its gold and silver reserves.

Scotia Mocatta and the Perth mint have run out of 100 ounce bars due to overwhelming demand. 

The US Mint set an all-time record in January, delivering a stunning 6.472 million ounces of silver coins. 50% greater than any month in published history, going back 26 years. 

This spike in demand is also occurring during a month where the paper price fell considerably.

   

Take away Quantitative Easing and the stock market tanks.  Continue it and the dollar tanks.  It is not strong demand that is moving the stock market; it is an explosion of the money supply by the Fed.  Gold and silver are reacting to this as can be seen by the demand coming out of China, India, Russia and the Middle East. The Chinese are cutting back on US Treasuries and buying precious metals.  In spite of rising prices, India is buying record amounts of gold.  There is a stampede going on to get the physical metal.

QE will have to go on to Infinity. When the major buyers turn sellers, the Federal Reserve Bank becomes the only buyer for the debt. 

China and Russia sell US Treasuries - Michael McKenzie  

China has sold billions of dollars in US Treasury bills for the second month in a row, even as strong buying from other foreign investors countered Beijing's move to reduce its holdings.

Political Instability

The events in Tunisia and Egypt have violently uprooting the entire Arab world a world characterized by the presence of a guardian power, the United States, managing the imbalances in this region with only two concerns: to control the price of oil and ensure Israel's security.

In times of uncertainty like this Gold & Silver will look far more attractive to the protesters  than their governments banks and money.  

   

Everything is in place for a Gold & Silver rally. The fundamentals are all there. It all depends on how far the banks are prepared to go to keep the price of Silver from exploding past resistance at $30.91.   

Happy investing,

Robert McManus
The Abundance Engineer

Email: rob@theabundanceengineer.com
Web: www.theabundanceengineer.com