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Continuing problems out of Europe, embroiled banks in the US, and political deadlock in Washing are all very bullish indicators for gold and silver, though the spot price may have momentarily drooped a bit.

November 22, 2011 – Continuing problems out of Europe, embroiled banks in the US, and political deadlock in Washing are all very bullish indicators for gold and silver, though the spot price may have momentarily drooped a bit. We are not experiencing a full-on correction, but there is a little confusion in the gold and silver markets over price differentials as the spot price does not seem to reflect sentiment as quickly as, for example, stock price. I would remind everyone that gold is actually a real commodity and therefore time and other factors go into its spot price.

Regardless of inherent value, it is true that the political and economic troubles around the world, generally, lend to a very optimistic outlook for gold. The best performing asset of the past twelve months may have a long way yet to go given that there is still a sovereign European debt problem that has a direct impact on the balance sheets of banks in the United States. News out of Europe has been quieter in the recent days, but the underlying issue has to be dealt with and it should be taken into account when evaluating the markets.

It was, after all, a bad $6.3 billion bet on European debt that brought down Jon Corzine’s MF Global. Make no mistake about it, that bad European debt is on American bank’s balance sheets and eventually banks will have to deal with it in some form or another. In the meantime, however, American savers are reacting to the bad news from the banking sector with increasing distrust for all things paper. There are reports from CNBC that customers are pulling their funds in response to the MF Global collapse and subsequent missing customer funds because they distrust banks.

At the same time, the Congressional Super Committee in Washington has reached a point of epic failure and has had to admit it. They have been unable, despite giving the power of Congress to a mere twelve people, to effectively reduce the budget deficit at all. The United State now has a $15 trillion budget deficit and there is no politically salable answer to it.

For gold and silver, these are huge macro indicators that more and more people will move to precious metals in the coming months. As the European problem continues to drag in American banks and Washington continues its junk fiscal policy, the supports for a strong presence in tangible commodities grows and gets stronger. The gold and silver markets, on a number of levels, show themselves for what they truly are under these conditions. They are fundamentally sound money that is good no matter what bankers or politicians do in Europe, Washington, or New York. Make your money the good money. Buy gold and silver.

Shannon King

Senior Staff Writer – GoldSilver.org

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