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A ‘Lehman moment’ will ensure gold and silver will soar again

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By Lawrence Williams

Nowadays it seems that every time there is inaction, or minimal stimulative action, by the Fed that gold – and silver – take a dive.  It appears to be long forgotten by the markets that gold performed extremely well throughout most of its bull run without overt Fed stimulus – but then gold investors on the fringe tend to be fickle animals increasingly overtly swayed by short term pronouncements with little cognisance taken of many of the underlying changes in the marketplace that have to be extremely bullish for precious metals.  Not least of these factors include declining gold output in most of the world’s major gold producing nations, hugely increasing Chinese demand – and perhaps most of all the fact that the global economy and banking system is teetering on the edge of a cliff with only a slight push needed to make it plunge to who knows where.

In his latest commentary on gold, Jeff Nichols – Managing Director of American Precious Metals Advisors and Senior Economic Adviser to Rosland Capital ponders on gold’s performance vis-a-vis U.S. Fed pronouncements.  ”Gold shed more than $50 an ounce in a blink following last Wednesday’s news from the Federal Reserve that America’s central bank would not, at least not now, initiate another round of quantitative easing, opting instead for more muted monetary stimulus by extending its “Operation Twist” through year-end”