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Tuesday, January 22nd, 2019 - Buy Gold - Bringing you trusted gold news and gold investing information since 2006

Precious Metals Rise to New Heights as Turmoil Spreads in the Middle East

We are constantly being advised that the Egyptian military has the situation under control. As the situation develops it’s becoming increasingly apparent that there is something wrong with this picture. The military and the media assure us that the morganatic wedding between the generals and the masses will proceed as scheduled. As the old song goes, “It’s time to wind up the masquerade… the piper must be paid.” The billion dollar question: Will the power vacuum lead to an anti-Western Islamist government?

In Russia, the czar was overthrown only to be replaced by a small minority party called “The Bolsheviks.” In Germany it was the “Nazis” that replaced the Weimar Republic. The Iranian Revolution gave us the “Mullahs” instead of the Shah. The recent elections in Lebanon gave us the terroristic Hezbollah. What is to be the future role of a military that has for the past 30 years played a crucial behind-the-scenes role in preserving its own vast business interests?

Some other disturbing headlines in today’s papers are:

  • “Battle Lines Harden Across the Mideast as Rulers Dig In”
  • “Dozens Reported Killed in Libyan Crackdown”
  • “Yemen Protesters Face Off for the 8th Day”
  • “The Committee Formed to Protect Journalists Fights Attacks”
  • “Egypt Disappearances Raise Concerns About the Military”

What does all this turmoil, restlessness and upheaval mean to us as investors? The message cannot be clearer: Precious metals will assume a more salient role as time goes by.

It is interesting to note that when tyrants depart they make sure that the gold they stole has preceded them. We do not have to be weathermen to determine which way the winds of change are blowing in the Middle East. Precious metals will remain a viable store of wealth and a quasi-currency, especially if these riots turn violent. Already there are reports that protesters were fired upon in Bahrain.

Silver ETF

Silver has broken out of a six-week consolidation into new highs and is currently showing incredible relative strength. This morning iShares Silver Trust (SLV) made an ascending triple-top breakout on the point and figure chart at $31. I believe we can start seeing another major leg higher and acceleration of the trend in precious metals. The physical demand is increasing in silver and it could continue its rapid rise higher because it’s in new high territory.

Gold (GLD) is showing strength as it broke the 50-day moving average to the upside. Gold and miners (GDX, SIL) reached oversold levels in January not seen in more than a year. Now many of the bears who sold out and expected a steeper correction will be returning, pushing gold, silver and mining stocks into new high territory. This is the perfect storm for precious metal investors.

The buy signal on January 25 has proven to be a short-term turning point and the break into new highs may look to be one of the best buying opportunities in years. Investors who did not trust the two-year trendline made a major mistake and sold out into the fear. Those times where fear reaches an extreme turn out to be the best opportunities.

Disclosure: I am long GLD, GDX.

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