Gold and Silver Prices Show Room to Grow

The gold and silver prices we are seeing now demonstrate both an affordable market as well as a market that has room to grow. Considering the low in gold occurred in 2001 at $261 per ounce, the prices we are seeing now reflect the most spectacular investment of the past ten years. What stock has gone from $261 to $1,660 a share?

This kind of growth in the markets is reasonably very attractive. However, there are many market participants who see the price increase as a bar from entry into the market now. The reasoning, which doesn’t really follow any fundamental market logic, goes to the effect that gold has already gained so much it cannot have much farther to go.

This is simply inaccurate. Imagine someone were to offer you Berkshire Hathaway stock at $800 and you asked a question like, “How much farther can this go?” Right now you would be kicking yourself for asking such a question. There is always room on the upside; the question is whether market fundamentals support the movement. In the case of Berkshire Hathaway, which is currently far and away above $800, the room on the upside combined with the able investing know-how of Warren Buffett has created a very valuable investment.

In terms of gold and silver prices, we are seeing more opportunity for growth on the upside than anything else. This is including the possibility of shifts downward in the price in the meantime. Any correction to the downside is and will be regarded as an entry-point opportunity in gold. Some investors have put numbers as low as $1,200 on the chart, though that is relatively unlikely, but they still understand the fundamentals support a higher price in the future and any lower price is a buying opportunity.

We are in a gold bull market and we are in it for the duration. Moves lower in price are to be expected to an extent and are to be anticipated as buying opportunities for the savvy investor. Remember the all-time nominal high for gold was at $1,923 on September 6, 2011 and we are currently trading near $1,660. From this perspective, there is already more than enough room for gold to grow just retracing the nominal high for a profit.

The relative affordability of gold and silver prices make now a very good time to buy a position in the precious metals now and benefit from further moves higher in the medium term.

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