It’s Panic Stations for Precious Metals…and More

No wonder they call it the devil’s metal…

Silver, that is. In the space of 24 hours, it opened at $15.39, traded as low as $14.15 and as high as $16.81, before finally closing the US session at $16.69. That is a wild ride. There will be some shell-shocked traders after that little session.

From top to bottom, that’s a range of nearly 20%…in 24 hours.

To put the silver move into perspective, gold traded in a massive $80 range…but that only represented a move of 7%. If it were to match silver, you’d need to see a trading range of nearly $200!

So if you’re still on the silver horse, you’ve either got nerves of steel or you’re blissfully ignorant — or a bit of both.

The action in precious metals shares in Australia was emblematic of the panic going on across the whole commodity complex. I haven’t seen that type of panic selling since the dark days of 2008. It was pure fear.

Bottom pickers should start to come into the market now, as yesterday’s carnage certainly shook many weak hands out of their positions. Whether it’s a lasting bottom is impossible to tell. We’ll only know in hindsight. But there could be room for a bit of a rally before more sellers come and take profits.

If you’re keen to speculate on a bounce and pick up some beaten down oil explorers, check out these three picks from my Diggers and Drillers colleague Jason Stevenson.

As I mentioned yesterday, these wild moves are all about the currency markets. The US dollar was weak overnight and everything non-dollarish (including commodities) all did well.

This rising volatility is the result of the currency wars. And as the years unfold, it’s only going to get worse.

The Australian dollar got a bit of a boost from the weaker greenback, although it’s only just keeping its head above US$0.85. That could be because the price crash of our great future export hopes, iron ore and LNG, is leading many in the market to bet on future interest rate cuts — rather than rises — in 2015.

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Greg Canavan is a Contributing Editor at Markets & Money and Head of Research at Port Phillip Publishing. He advocates a counter-intuitive investment philosophy based on the old adage that ‘ignorance is bliss’. Greg says that investing in the ‘Information Age’ means you now have all the information you need. But is it really useful? Much of it is noise, and serves to confuse rather than inform investors. And, through the process of confirmation bias, you tend to sift the information that you agree with. As a result, you reinforce your biases. This gives you the impression that you know what is going on. But really, you don’t know. No one does. The world is far too complex to understand. When you accept this, your newfound ignorance becomes a formidable investment weapon. That’s because you’re not a slave to your emotions and biases. Greg puts this philosophy into action as the Editor of Crisis & Opportunity. He sees opportunities in crises. To find the opportunities, he uses a process called the ‘Fusion Method’, which combines charting analysis with more conventional valuation analysis. Charting is important because it contains no opinions or emotions. Combine that with traditional stock analysis, and you have a robust stock selection strategy. With Greg’s help, you can implement a long-term wealth-building strategy into your financial planning, be better prepared for the financial challenges ahead, and stop making the same mistakes that most private investors do every time they buy a stock. To find out more about Greg’s investing style and his financial worldview, take out a free subscription to Markets & Money here. And to discover more about Greg’s ‘ignorance is bliss’ investment strategy and the Fusion Method of investing, take out a 30-day trial to his value investing service Crisis & Opportunity here. Official websites and financial e-letters Greg writes for:

 


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