Gold Price – Silver Price Today 4-24-2013

The price of Gold is up 0.65%, or $9.20 per troy ounce in morning trading, at $1424.50 .
The price of Silver is down -0.09%, or $-0.02 per troy ounce, also in morning trading, at $22.91 .

Crude oil is currently up 1.75% to $90.74

USD Index is down -0.08% to $83.02

Gold Price London Fix

Silver Price London Fix

Gold Price – Silver Price Today 4-22-2013

The price of Gold is up 0.93%, or $13.10 per troy ounce in morning trading, at $1425.00 .
The price of Silver is up 0.17%, or $0.04 per troy ounce, also in morning trading, at $23.60 .

Crude oil is currently up 0.48% to $88.43

USD Index is down -0.03% to $82.73

Gold Price London Fix

Silver Price London Fix

“Any man who thinks he can be happy and prosperous by letting the Government take care of him; better take a closer look at the American Indian.” Henry Ford

Dear friend and client of AFE,

Please find a brief market update.

The socialist experiment at work in an economy

For those of you who think that 48 million Americans on food stamps and half the people in the US receiving some sort of government handout is okay, here is a fun anecdotal story:

An economics professor at a local college made a statement that he had never failed a single student before, but had recently failed an entire class. That class had insisted that Obama’s socialism worked and that no one would be poor and no one would be rich, a great equalizer.

The professor then said, “OK, we will have an experiment in this class on Obama’s plan”. All grades will be averaged and everyone will receive the same grade so no one will fail and no one will receive an A…. (substituting grades for dollars – something closer to home and more readily understood by all).

After the first test, the grades were averaged and everyone got a B. The students who studied hard were upset and the students who studied little were happy. As the second test rolled around, the students who studied little had studied even less and the ones who studied hard decided they wanted a free ride too so they studied little.

The second test average was a D! No one was happy. When the 3rd test rolled around, the average was an F.

As the tests proceeded, the scores never increased as bickering, blame and name-calling all resulted in hard feelings and no one would study for the benefit of anyone else.

To their great surprise, ALL FAILED and the professor told them that socialism would also ultimately fail because when the reward is great, the effort to succeed is great, but when government takes all the reward away, no one will try or want to succeed.

These are possibly the 5 best sentences you’ll ever read and all applicable to this experiment:

1. You cannot legislate the poor into prosperity by legislating the wealthy out of prosperity.

2. What one person receives without working for, another person must work for without receiving.

3. The government cannot give to anybody anything that the government does not first take from somebody else.

4. You cannot multiply wealth by dividing it!

5. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that is the beginning of the end of any nation.

Quick Numbers in Regards To The Recent Price Smash

The drop in gold price has already smashed listed gold companies to the point that the combined market cap of the world’s top 10 producers is now the same as Qualcomm with the likes of Barrick Gold now trading at prices last seen in 1992.

There are only 12 trading days since 2000 where gold has dropped more than 4% in a day, and half of those were in 2008. This type of hyper-fearful panic only occurs once every few decades. Panics like this also mark major bottoms, even in a bear market.

In the 33 months after the 2008 drop in gold price of 27.2%, gold went on from around $700 up to $1900. The current pullback is about 29% from the last high. If we measure from the intraday bottom of $1321 and see the same kind of major upleg, it could take gold past $2700. After such extreme selling, price virtually always double over the subsequent 12 months to 3 years.

The main drivers of the gold market are the same today that they were in 2000 when this bull market started, and regardless of the in-correct assumption by some market commentators that things are somehow different, gold should remain in demand for years to come.

To be clear, we at AFE are not perma-bulls on gold. We are invested in physical, probably to a higher degree than most investors, however when we are at what appears to be the top of the secular bull, we will trim positions and diversify out of metal. Regardless of the last few weeks price actionwe do not believe this bull is over yet.

With kind regards,

Alex Stanczyk
Chief Market Strategist
Anglo Far-East