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Something fishy has been going on with gold and silver prices lately, and I’m not talking about the obvious disconnect with real economic conditions.

October 31, 2011 – Something fishy has been going on with gold and silver prices lately, and I’m not talking about the obvious disconnect with real economic conditions.

We can expect the two metals to react similarly, but lately the two seem a bit too tightly linked. After all, silver should be more sensitive to supply and demand pressures that are decidedly shorter on the supply side. Yet when gold dips, so does silver.

The answer may lie in the nature of today’s silver market. By a wide margin most of the action is in paper silver, and speculators exert considerable control over current prices. Short-term speculation is far more influenced by perception than reality and is also much more susceptible to manipulation.

The fundamentals dictate a much higher price for silver. The recent “correction” has been played to the hilt by those whose agenda are threatened by silver investment, fueling the fears of retail investors and steering them away from what is in fact a very promising investment.

Industrial demand for silver has not fallen, but continues to rise as already constricted supplies continue to diminish. Thus silver is not nearly as sensitive to economic conditions as all of the current propaganda would have you believe. And as fiat monies weaken pressure will mount to monetize silver as well as gold.

Both gold and silver have exceptional prospects because they are assets that don’t require ever greater consumption or debt to grow in value. As such they are insulated from the decline of fiat money and represent a true store of wealth.

As long as people think of wealth in terms of currency, however, we will continue to see anomalies in gold and silver prices that appear to defy all logic. But you can buck the fundamentals for just so long.

I believe silver will be the first to break free of the restraining forces because the misconceptions holding it down just don’t stand up to rational scrutiny. Gold may take a bit longer, but the desperate need for a secure store of wealth is an irresistible force.

Both gold and silver prices are headed for unimaginable heights over the next few years and those who pass up today’s opportunities will surely regret it.

Shannon King

Senior Staff Writer – GoldSilver.org

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