Precious Metals Bottoming...

Precious metals have plummeted along with the rest of the commodities complex. The deflationists seemed to prevail over the inflationists. Moreover, the financial crisis seemed to be miraculously cured by the Fed/Treasury/Administration. Wrong and wrong...the fundamentals have not changed one bit. Indeed, deleveraging during the past week and a half has been severe (gold sold off the most in a quarter century). Gold and silver sold off to levels we haven't seen since the end of last year - the same time massive speculation in both markets began. But the sell-off has been very technical, providing low risk opportunities to short.

The ultimate question has been when the precious metals would bottom. Obviously, such bottoming would occur when long term buyers dip in and speculators realize that the current crisis is far from over. Although many believe the precious metals sell-off to occur over a longer period of time, I believe we saw the bottom today. Many expect gold to sell off to $850/oz and silver to sell off to $15/oz (both are pretty obvious support levels), but this is turning out to be wishful thinking. Today, gold and silver sold off to their highs reached in November last year - a good level to start buying.

He who wins is he who owns the most ounces...