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Outlook for Precious Metals in 2013

By January 30, 2013

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Gold and silver are in a holding pattern right now.  The outlook continues to be very positive going forward as there appears to be no end in sight for the massive stimulus from central banks.

Gold captures the most headlines, but it has been quiet.  The market has basically been consolidating the last two years.  Silver is in the same situation.  There has been talk of an improving global economy and that would benefit silver.

I have talked countless times about the fundamantals of these markets over the last five years and they are probably stronger now than ever.  Therefore, I think the precious metals continue to move higher.  Gold could reach $2,000 this year.  I don't see the run coming to an end until we have some type of parabolic move and a blowoff top.  I would expect that to take prices north of $3,000 in the coming years.

Silver will most likely challenge the $50 highs again in the next year or two.  Platinum might be the real story in 2013.  South Africa minesaccount for 75 percent of the total world production and things are a mess over there.  Rising labor costs, environmental regulations and a plethora of other problems are making the miners run losses...even with platinum prices near $1,700!

Anglo American is shutting down a mine and laying off 14,000 workers.  This will take more supply offline and lead to a sharp deficit in production again this year.  The only solution at this point to get more production is if platinum prices continue to rise.  This will give incentives to increase production.  Lower prices will mean further declines in production, which will ultimately lead to higher prices.

I like more of a buy and hold strategy with the precious metals instead of actively trading.  Buying long term options can be a strategy, but the option premiums are still very high.  I prefer the selling put premiums on pullbacks in the market.

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