It Ain't Over Till It's Over - Silver and Gold Still Seem the Best Bets

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...When immediate liquidity needs unwind, gold and silver could see a substantial rise given the inflationary element in all the major rescue packages unfolding around the world, and as the current trend of dollar strength diminishes...

There has seldom been a more appropriate occasion in which to use the immortal words of Yogi Berra - "It ain't over 'til it's over"- than the current financial turmoil which has seen world stock markets decimated and commodities prices plunging. No sooner do the authorities take steps to calm the markets, with an immediate corresponding positive reaction, than more news and economic fears drag the markets down to new lows again...

But if one wants to take a bet on the best performing commodity, as far as capital protection is concerned, in the current climate you have to look at the precious metals sector. While it may be well off its peaks gold has performed well in comparison with most other commodities and the stock market in general.

Even gold seemed to be heading for a major fall late last week, but made a halfway decent recovery on Friday, although ended below recent levels. It seems that a heavy renewed spate of Indian buying is underpinning the price as it falls as India enters the festival season and this is helping counter sales being made to generate liquidity in the financial sector. The liquidity sales have been the reason the gold price has perhaps not been behaving as generally expected in a time of financial turmoil.

And where gold goes silver goes too - usually in an even more volatile manner. If one wants to take a bet on a likely best performer amongst commodities, silver may well top the list closely followed by gold itself, depending, of course on how much more needs to be sold to meet liquidity needs. When immediate liquidity needs unwind, gold and silver could see a substantial rise given the inflationary element in all the major rescue packages unfolding around the world, and as the current trend of dollar strength diminishes. But the ride could be a very choppy one until that time comes.

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