There’s been a great deal of pressure on silver lately, sinking it down to near $14, the lowest it has been in months. Interestingly however, silver predictions on the wire for the next 120 days remain remarkably optimistic and Lloyds Asset Management, known for its on-the-mark predictions in silver and other precious metals, has joined in the optimism and predicts silver will trade above $17.40 by the first of May.

SILVER OPTIMISM REMAINS STRONG

CEO James Burbage III sees a new support for silver forming as an opportunity for short-term chipping and putting during the market consolidation. “It looks to me that this information on the dollar rally shows a new support line that has been placed for silver,” Burbage said. “We see an opportunity not only for some short term chipping and putting as the market consolidates between $21 and $16 but also the possibility for the shorts to shake out the weaker positions; the small retail clients.”

Large short traders have capitalized on the market downturn as many stop loss-orders were automatically executed, and smaller investors sold entire positions. “With the consolidation behind us now, the market can be witnessed making a healthy correction that may test the recent high from March, 2008,” claimed Burbage.

SILVER PUSHES NEW HIGHS

This would be approximately 4 to 5 dollars of market movement for bull investors to try and capitalize on in 2010. With nothing historic happening in the market; no new banks going out of business, and the dollar holding strong on the index, it would appear the recent decline is simply the result of a market testing its own resistance levels – which all markets do. Lloyds Asset Management believes a several dollar increase to be a fairly conservative prediction of where silver could be trading in the next 120 days.

Burbage believes that silver will be back above $17.40 by May this year. “If our May expectations are met, watch for silver to take another run at historical levels of almost $22 per ounce,” Burbage stated. “If $22 is breached in 2010, watch out! I could see silver trading as high as $28 to $30 within just days of a historical high price breach.”

About James Burbage III & Lloyds Asset Management
James Burbage, III, has created a firm whose name is synonymous with the highest degree of ethics and professionalism in the precious metals investment industry. With clients around the globe, Lloyds Asset Management has the experience, financial experts and state-of-the-art technology to provide seasoned counsel for a broad spectrum of investors.

You must bear in mind, however, that the recent consolation was fueled by what I believe was an attempt by the U.S. government to encourage a sense of improvement in consumer confidence. As many brace for what could be a weaker holiday spending season than last, the consequences of short cuts by the “powers that be” will prove more detrimental in the long run, particularly to their agenda. This does not completely delete the strength of the consolidation but as with any government PR tactics, there are long reaching considerations which extend well beyond the current season. Some of which may come to bear upon the very consolidation efforts made recently in a direct way.

How Is This Possible?

First, let’s take a look at the sudden trend of unemployment that has reversed a 14-month course. Would I say it is due to the “Green Jobs” that the Recovery Act has produced? Hardly. Upon closer observation, you’ll have to agree there haven’t been any noticeable highway development projects with ribbon cutting ceremonies lately. I’ve yet to witness any of this “retro fitting” of old government buildings or seen wind/solar power plants being constructed. I haven’t noticed any conspicuous job creation either.

Second, Bank of America is being touted as the poster child of the “Big banks on the path to a solid recovery”, because they are “returning the $45 Billion in TARP funds”. Let’s keep it real here. This sentiment assumes that we, the people who pass our life savings through these channels regularly, do not know or understand the fractional reserve banking system. The system the banks have abused and which has thrust us unwillingly as a nation into the Great American Banking Calamity. Who really knows how much money they were they able to fractionally create before returning the token $45B? One has but to barely look beneath the surface of this gesture by Bank of America to see that the undercurrent of misappropriation is still flowing strong.

Have we suddenly taken leave of our understanding of the definition of “inflation”? It certainly is not when a gallon of milk cost $2 more. It is when the amount of dollars (USD) in circulation is increased, whether it is paper money or the ones and zeros on a computer screen. The rise in consumer prices is simply a symptom of inflation. The Federal Reserve is banking on this misconception to run interference while they walk a high wire trying to minimize the damage. This could easily be the “early 80’s 2.0” on steroids as silver counteracts inflation again and is positioned to break all previously set records as prices continue to climb.

While “Helicopter Ben” is being grilled on Capitol Hill about the Recovery Act, he is telling the world that a weaker dollar policy is good for the foreseeable future as it will cheapen our exports and aid in the recovery. But who can speak with any certainty on what exactly we export anymore, other than debt and factory jobs? The last time I checked, we were about out of factory jobs so I guess it’s just down to exporting debt? This rhetoric has exacerbated the descent of the USD against all currencies which has made the tangible commodity markets more appealing. Most specifically, Gold and Silver.

Media Obsession

The media’s sudden obsession with the direction and strength of precious metals has brought a lot of fresh blood to the precious metals market and rightfully so. The success story of gold rising from the mid $800 range to the low $1200’s has been a recession-defying beacon of stability and intrinsic value. While Silver has increased from the low $9 range just 12 months ago to the mid $19 range last week. In an economic environment where roughly half of American’s retirements have disappeared in the fourth quarter of 2008, getting back to basics with wealth preservation tools that truly embody financial stability with real intrinsic value seems to be the most logical move to make. The Mints are unable to keep production online to match the demand, miners are scrambling to reopen shoots that may produce enough metal to satisfy the insatiable global demand and every channel you turn to has 50 commercials a day encouraging you to turn in your “broken or unwanted gold for cash”. If you can’t see the handwriting on the wall, take a closer look now. We seem to have exhausted the credit fueled race for materialistic acquisitions and not a moment too soon.

Be sure to look at your economic calendar, as this week is a RECORD week for treasury auctions in an attempt to raise capital to cover our equally record deficits. It seems a little bizarre to me that the Dubai default was magically recognized on Thursday, November 26; the same day of Thanksgiving! They didn’t know with any forewarning that a default was brewing and just happened to discover this development and release the news to the world on a day that US markets were closed and subsequently would cause an exodus to the USD as a safe haven trade? With most traders taking a 4-day holiday weekend at the time and little or no retaliation to refute the USD’s rise it seems more than a little fishy. Then, add on the curiously better unemployment data of the following week and you have a propped up USD and still a weak T-Bill auction.

With a staggering 19 million unoccupied, foreclosed homes in this country, why are only 9 million, less than half, listed for sale? The answer is simple but unpleasant; banks are sandbagging 10 million homes in hopes of artificially stabilizing housing prices which, if successful (and it is a huge IF), would trick the media into reporting that the recovery is in full effect. There are upwards of another 20 million plus mortgages with 5 yr ARMs set to adjust in the first quarter of 2010. It doesn’t take a rocket scientist to tell you how this will affect the banks. Roughly $1.8 trillion in unpaid credit card debt leaving Americans with the choice to pay the AMEX bill or feeding their kids, again, how will this affect the banks? The FED is due to start shuffling the “Toxic Assets” back to the banks in the 1st quarter also. Hedging yourself from these issues will only prove to be sound logic when the banks have their hands out again in January and the government is ALL TOO WILLING to print and hand out more future tax money to these banks while they give Billions in bonuses to themselves.

In conclusion, I believe that this current consolidation is in fact the best course of action for the true health and trend of precious metals as they continue their ascent to their inflation-adjusted prices, which are long overdue. The new money that has flocked to the metals at the behest of the media’s newfound story de jour has piled on a little heavily and a little too late in this leg of the rally in Gold. It’s time for a consolidation and a cleansing of the late comer scared money toters looking for a quick buck. A general rule of thumb is “once the media tells you to invest somewhere, the money has been made”. Once we shake out the scared money, we will regroup and mount the charge towards the $23 range by year’s end in Silver and Gold above $1200. Next year, we may very well see Silver charging towards $30 and Gold towards $1500 as Central Banks around the world rush to shore up their asset base by acquiring as much Gold and Silver as possible before it becomes unaffordable.

With more than 150,000 tons mined into production since its discovery, gold continues to maintain its rarity. Countries such as the United States, China, Australia and the Republic of South Africa are currently regarded as the primary gold producers although annual mining efforts in these locations are less than 2500 tons. Gold is recognized as having several sides which include construction, currency, investments and jewelry. Much of the rise in values is considered from investment and currency options such as gold bars, gold coins and exchange trade funds (ETF).

A remarkable world demand in 2009 between April and June for more than 415 tons of gold has inflated the demand 2.6 times what it was during the same time last year. Combined with the economic crisis in the United States and an unstable platform for the dollar, gold has experienced an increase in price to over $1200 per troy ounce this month.

As the Federal Reserve Bank (FRB) has given no indication that it will change the low interest policy, there is an open flow from dollar assets to high interest currencies and the commodity market; more specifically, gold. This movement of money has created speculation that as the value of gold rises, those positioned to make strategic gains with gold currency may be able to write their own ticket.

According to James Burbage, III, CEO of Lloyd’s Asset Management, gold has built up some momentum and will rise to $1500 in two years. “As gold continues to rise, individual investors who have new money to invest in large quantities will definitely see remarkable returns on their investments,” Burbage said, noting that the confidence in the dollar will affect the price of gold but that this confidence is building on the regular. Clearly the U.S. market will continue to grow and re-strengthen, and those who are keeping a close eye on this particular economy will move with force and intention.

The ability of the U.S. Commodity Futures Trading Commission (CFTC) to greatly influence the strength of gold should not be underestimated. Currently, conditions exist where these regulations continue to gain authority, causing an increase in the search to find a “loophole” with ETF products. The alternative has been to turn to over-the-counter products because the regulations governing them are not as stringent.

“It is a good idea to keep an eye on the status of the world economy in terms of gold,” Burbage indicates. “Gold continues to rise with the increase directly affected by the American dollar.” Money is flowing and opportunities abound with gold before strides are taken towards tougher regulations.

About James Burbage III & Lloyds Asset Management
James Burbage, III, has created a firm whose name is synonymous with the highest degree of ethics and professionalism in the precious metals investment industry. With clients around the globe, Lloyds Asset Management has the experience, financial experts and state-of-the-art technology to provide seasoned counsel for a broad spectrum of investors.

James Burbage, III, CEO of Lloyd’s Asset Management, has been right on target throughout the year with his predictions for the success of silver. Not once or twice or even three times, but for the fourth straight prediction in a row, Burbage has hit on silver precisely! “For more than a year now, silver has been performing in positive moves as a result of increased demand and the weakening of the US dollar. Silver is becoming more than a safe haven for investors but a source of significant returns as it continues to push towards new highs,” Burbage says.

You don’t have to be a financial analyst to know that very profitable opportunities have been presented over this year and more may lie ahead as silver is predicted to continue its climb towards new highs in the coming months. Increase in the demand for silver both in luxury goods and in industrial needs, combined with a weakening US dollar are classic market indicators that make the future of investing in silver look very bullish.

Burbage is quite optimistic about the near future of silver and the track record of successful predictions that have paved the path to investment rewards thus far. “I believe silver could still hit new highs by the end of the year, and what better way to ring in the New Year,” Burbage jokes.

With performances like this, it stands to reason that silver is no longer the silent giant and makes for a smart addition to any precious metals portfolio. As this chart (Source: Stockcharts.com) indicates, Burbage’s predictions have landed square on the money with silver currently selling at $18.38. This after a better than 36% upswing over the last five months. We may see silver do things it’s never done before, providing a financial windfall for those who invest in time.

TOKYO (MarketWatch) — Silver’s not so much a poor man’s gold anymore and investors may soon realize that the white metal’s the real treasure.

True, at $17 per ounce, silver is cheap — trading around 60 times less than gold’s record price of more than $1,100. But year to date, it’s climbed 52% in value compared with gold’s rise of around 25%, according to data from FactSet Research.

Silver is a precious metal, after all, one that has historically outperformed gold in a bull market and doubles as an industrial metal — and supplies of it are depleting at a much more rapid pace.

“Silver is unique in terms of being both a monetary and an industrial metal,” the Bullion Services Team at GoldCore said in a recent report, pointing out that it’s severely undervalued. “Silver remains the investment opportunity of a lifetime.”

More… »

The history of precious metals stands but new historic strides are being made with gold and silver. With inflation still very low and prices predicted to soar, silver is making a quicker than anticipated run at the recent high of $21.34 per ounce in March, 2008, and some analysts are now predicting a new high of $23 by year’s end.

Gold has not become the silent partner though, for those who want to stay focused on the precious metal most highly sought after. With an interest rate hike in Australia and geopolitical tension between Iran and Israel, gold jumped to an all time high of $1,062 per ounce, leaving an indisputable market to invest in.

This is the handwriting on the wall if you consider the performance of gold to be a precursor for what is ahead with silver, especially considering silver has historically outperformed gold. Those who have been taking a notice should consider silver the wise investment for the coming months to sharpen up a precious metals portfolio. Although economic hard times are continuing their persistent run on the majority of the world’s industries, the market for precious metals is virtually insulated against recessionary damage.

As Lloyds Asset Management successfully predicted, silver has begun testing the $18 mark. This is the kind of predictability you can take to the bank with returns in multiples in as short a season as between now and Christmas. “This large move in silver is coming very soon and there’s no time like the present to thoroughly understand that precious metals are where the money is being made,” says James Burbage III, President of Lloyds Asset Management.

Even a rumor in British newspapers of Gulf Arab states in secret talks to abandon U.S. currency in the oil trade can cause a volatile swing upwards. Expect history to be made in precious metals, particularly silver, when most investors are still looking at stock with meager returns on investment. It isn’t the first time that Lloyds Asset Management has predicted a proverbial explosion in silver. This time, it is a financial blizzard whose epic proportions may be like that which investors have never seen before.

“Silver has been the sleeping giant that’s being awakened by a market ripe for precious metal investors who know how to take the necessary steps to secure their financial futures.” The perceived value of silver has historically been overshadowed by the brilliance of gold, but this trend is taking a stellar turn in favor of silver as the price continues on a proverbial hell-bent mission. “We may see silver soar to the $23 mark and beyond before 2009 comes to a close,” Burbage adds.

One way to overcome the above challenges is to invest in precious metals such as gold, silver or platinum. This is not a new investment strategy. For decades, savvy investors have been investing in precious metals to hedge against uncertain economic times. Today, many investors are still using gold as a safe investment vehicle. Whenever they feel that they needed some protection, they start investing in gold. You see the demand for gold going up when the market is volatile and behaving in an erratic manner.

Even when times are good, precious metal can still be a valuable investment option. Most investors tend to put a large portion of their assets in stocks and bonds. However, some of these investments (especially stocks) have the tendency to fluctuate greatly due to sharp changes in market sentiment. To manage such risks, it is always wise to place 10% to 20% of the assets in other investments such as gold.

Inflation is inevitable in any financial market. When sharp inflation occurs, that means the purchasing power of the dollar is eroded. In this case, it may not be beneficial to hold on to cash. Cash may then be used to invest in gold, which has proven to maintain consistent purchasing power throughout the years.

In addition, gold also provides protection against the weak dollar. Currency strength fluctuates due to market changes. When the dollar is weak, it is better to be the owner of precious metals instead of cash.

The reason why the prices of precious metals such as gold are relatively stable is because of the inelastic supply of the precious metals. In other words, you won’t see a sudden influx of precious metals flooding the marketplace. On the other hand, global demand for such metals have been on the rise steadily. Since pricing is affected by basic demand and supply principles, this means that the prices of precious metals also rises consistently.

Recognizing this slow but steady uprising trend, financial experts have always advised investors to place at least part of their assets in gold, silver or platinum to manage the investment risks.

Very often, the pricing of such metals is compared with stocks and bonds. It’s very easy to observe that pricing for a particular stock tends to fluctuate especially when the economy is turbulent. However, in stark comparison, prices for the metals are consistently on the rise. In other words, stocks and bonds tend to do better when times are good and the economy is growing strongly. However, when turbulence and uncertainty sets in, precious metals become a valuable commodity to invest in.

America’s strengthening of regulations, the ETF product bent on finding a loophole

NOTE: This article has been translated from Japanese and originally appeared in the Nekkei Financial News. James Burbage, III, President of Lloyds Asset Management, was one of several financial experts asked to contribute insight on the rising value of gold in contrast to the decline of the US dollar. The original article has been reproduced here without changes.

Gold — As a type of precious metal, approximately 150,000 tons have been turned out since the dawn of history, and its rarity is high. With the present annual mining amount at a little under 2500 tons, countries such as the Republic of South Africa, the United States, Australia, and China are chief producing countries.

Possessing a side as a historically long-used currency, it has become a means for the economy and savings. It’s present uses are greatly divided, existing in the forms of jewelry, investments, and construction. As a method of investment, there are gold bullions (gold bars) and gold coins, as well as such forms as an exchange-traded fund (ETF).

With the world’s investment demand at approximately 417 tons between the months of April and June this year, it has been swollen by 2.6 times from over the same period last year. In situations such as the economic crisis, where trust in the dollar as the principal currency has begun to shake, there is the tendency for capital in which gold is focused upon to flow.

Q: The international value of gold is approaching a historic high. What are the reasons for this?

Last week, New York gold futures (central contract month of December futures) rose up to $1020 per troy ounce. This is an expansion coming close to the highest value of 1033.9 dollars that came about in the after hours trading last year in March. Short term futures have already updated to the highest value on the 16th. On the technical side, as a result of the pick-up in momentum, Standard Bank’s Tokyo branch manager Yuichi Ikemizu spoke regarding the “complete stop loss repurchase when the value surpassed $1010.”

At the bottom of all this is the anticipation of the dollar’s fall. Recently, the Federal Reserve Bank (FRB) is expected for the time being to continue its low interest policy, and money is flowing from dollar assets to the commodity market and high interest currencies.

Q: Apart from the movement of money speculation, how is the actual demand for gold?

The actual demand is stagnating. In India, which is the country in highest demand, the demand for jewelry stopped at 88 tons from 2009/4~6, a 3% drop from the same period last year. This is a result of India’s sluggish domestic consumption. There is also the explanation that the affect of India’s representative agricultural produce, sugar, which has been rising in value from a poor harvest in sugarcane, has been resounding. The price hike in sugar, which is a product vital to the livelihood of people working in agriculture, puts pressure on their disposable income. As on one hand the value of gold rises, the number of those selling on hand jewelery increases, and scrap (secondhand) supply and demand is loosening as a result.

Q: The International Monetary Fund (IMF) announced the sale of gold, but what effects will this have?

The IMF announced on the 18th that they have decided on the sale of at maximum 403.3 tons of gold, which is equivalent to 1/8 of its total holdings (over 3200 tons). In reality, the gold sale policy and amount being sold are part of an already existing plan. Nevertheless, on the 21st there was a scene where the New York market’s gold futures temporarily forced their way to $1000. World Gold Council’s Itsuo Toshima/Japan-Korea regional representative explained that in the increasing wariness of high values, it has become a psychological bearish factor.

Q: Crude oil price recovery are also remarkable. Besides gold, what products is money drawing toward?

The price movement of New York oil futures putting in $70 per barrel is continuing. In comparison to the end of last year’s low prices, the standard has gone up by two times. With American stocks raising expectations of economic recovery in the background, funds and such have given birth to a surplus in capital, and the flow of money into crude oil is likely to rise.

Putting the cheap dollar and inflation observation in the background, there is a strong investment motivation towards products tied to American investors. According to a survey in the U.S., the August market scale of ETF products (exchange traded funds), where there are famous individual investors, has approximately doubled from one year ago to $545 billion. This is becoming a case where the new approximately $218 billion capital from the beginning of the year has flowed out. The remarkable capital outflow in the large scale ETF, which is connected to the stock price index, is indeed a contrasting movement.

In the London market as well, 3-month copper bullion futures rose up to around $6500 per ton for the first time in a year during the first half of September. The actual demand, for example, for China to reconstitute its strategic stockpile is wavering. Fixing attention on this, speculation money is also flowing here. Trading companies and the like view that from the end of the year China will again move to an active copper bullion supply. Anticipating this, the possibility of capital further flowing is circulating.

Having received resources/sudden energy rises up to the second half of last year, the criticism that speculation money will make the commodity market more volatile and upset the economy has risen all over the world. There is also the movement toward tougher regulations.

What speculators are paying more attention to is certainly the strengthening of regulations by the U.S. Commodity Futures Trading Commission (CFTC), which plans to introduce trade limits in energy like crude oil, and the agricultural market. Anticipating this, the movement towards abolishing ETN products (private bonds) and halting new sales of ETN products is succeeding one after the other.

In trying to confine the affects of such regulations to a minimum, the movement to find that “loophole” is also active. America’s prominent ETF products, United States Natural Gas Fund (UNG), etc., are reducing the amount of trading in the futures market, and instead are increasing trade in the over-the-counter (OTC) market, where regulations are slack. Recently in the New York market, a new ETF type has appeared that connects to the index that targets stock prices for 142 companies that involved in petroleum and fertilizer products. Commodity market players are all desperate for survival.

Q: It looks as though the plan to move money to the commodity market will continue. What are things to keep aware of from here on forward?

It is still the trend of gold. A key man in the commodity market, James Burbage of Lloyd’s Asset Management, is saying that gold will rise up to $1500 in two years. Individual investors will tend to move to where news of things such as “high value updates” accumulate. Gold rises closely to the highest value, and it is seen the same as new money to be invested in large quantities. Naturally looking to the long term, the status of confidence in the dollar largely affects the price of gold. In the semi-long term, it is by this principle that a close eye will be kept on the ability of the U.S. to grow, and from the movement of finance and current accounts as well.

The status of the world economy in commodities other than gold are definitely important. Mitsubishi UFJ Bonds Economic Circulation Research Institute’s Yuji Shimanaka has been saying that as the commodity market is an indicator of the economy’s whereabouts, money will flow if an economic recover can be brought about clearly. There are also those speaking out, indicating a low second possibility in an unclear economic environment. Either way, if the commodity market greatly distances itself from the economy and actual demand, and rises in money leadership, caution is best advised.

By the time the economic dominoes were in full motion and the Wall Street giants began to crumble beneath the weight of the recession, many were left questioning what could be done to make tracks of financial stability in the aftermath.

Today we see that precious metals are standing their ground even as the economic downward spiral has many of the nation’s top financial analysts predicting that hundreds more banks will fail in the next three to five years. The losses expected to tally more than $15 trillion dollars around the world. Many investors have reacted by choosing to bury their nest eggs as deeply as possible, hoping to emerge with their savings unscathed by the soaring rate of inflation, increased rate of unemployment and increased pressure on paper-backed industries.

While the end of the recession is not quite in sight, one thing is certain: investment leveraging of precious metals presents ample opportunity to hold ground in these challenging financial conditions. Silver and platinum are both the mainstay of the world’s financial markets and the scarcest metals respectively. A minimum investment of 20 percent with the balance financed creates a solid foundation for multiplying a relative price change that is five times the equivalent of making an all-cash investment purchase.

Last year’s highs for silver and gold may pale in comparison to the potential safe haven that precious metals are predicted to provide. The potential for silver to reach $25 an ounce and gold to peak at a staggering $1250 per ounce makes precious metals the way to go to create a leveraged investment portfolio that self insulates against the volatility of today’s financial market and subsequent economic woes.

Whether you want to convert to instant liquidity upon repayment of your financing or keep your metals in storage, gold, silver and platinum provide the added safety of knowing every investment dollar leveraged into these precious metals is one well spent. So the unequivocal answer is yes, the recession can be thwarted with smart investments in precious metals and Lloyds Asset Management can show you how.