silverbearcafe.com / By Rakesh Neelakandan / December 31, 2012
Fiscal cliff issue is just the tip of the iceberg. The patchwork deal would not address the debt ceiling issue at all and would be a source of consternation for the times to come.
If you are an intraday trader, the markets may not offer much prospects for the day as the trend is expected to be flat. But, if you are having a position for the long term, you may hold on to silver, come what may.
The logic is here:
The US politicians are busy clinching a deal on fiscal cliff and obviously, given the time and political constraints, a comprehensive deal is not expected out of them. They may at best reach a face-saving solution that would at least not spook the markets.
Still, the markets have always been expecting a solution to the crisis and last week, when the markets sensed that a comprehensive deal may not be arrived at, they priced in a patchwork solution. Gold dived a bit, silver maintained a studied calmness compared to gold.
Since silver is also an industrial commodity, it has a an advantage in that signals of growth would help it gain and a recessionary signal would boost its prices (it being an investment commodity).
Now, the nature and possibilities of a compromise deal is well depicted here.
The immediate effect of the compromise deal would be reflected as a downward trend in markets; gold, silver and treasuries may climb. But, if the compromise deal falls short of minimal expectations, then the uptrend in gold, silver may not even occur and treasuries could probably sky-rocket.
Recent Comments