Silver may outperform gold but remember why they both are rising

from Mineweb
A look at the factors driving gold and silver supply and demand and why Warrren Buffett just misses the point as to why they are, and will remain, of great value as investments.
Author: Julian Phillips
Posted:  Wednesday , 14 Mar 2012
BENONI -
The last few weeks have seen a larger consolidation pattern forming in gold, pointing to a much bigger consolidating pattern that implies far more than just a short-term trading move just ahead of us. The forces that drive both supply and demand in the very short-term are just about in balance, so it is appropriate that we look at these forces to see how they influence gold prices in the short, medium, and long term.
The forces that influence the gold and silver markets are very different from those that affect industrial and base metals. They go far beyond simple prices and the technical picture of demand and supply. They encompass trust, confidence, dependability, and protection that have little or nothing to do with gold’s uses. Warren Buffett is quite right about the “uselessness” of gold. But he has missed the point as to its value. Such a master of management and investment must find such an unmanageable metal virtually useless to him. But therein lays its value as an investment.
Over the long term gold cannot be managed or controlled. It’s the last investment standing when push comes to shove and silver is its lesser sidekick. We mentioned the saying in an earlier article that people don’t buy gold to make money but because they have money. That’s why central banks hold gold. They wish they didn’t have to but they know that their currencies are vulnerable to mismanagement and that over time are almost inevitably mismanaged. Gold is bought to get away from people and their games in the knowledge that when those games are played gold stands at much higher levels than before the games started. During the time that these events are played out, the gold and silver prices reflect each step made.
At Gold Forecaster and Silver Forecaster, we track these influences as much as we track the fundamental and technical pictures. Failure to do this would make our work directionless as well as inadequate. After all, one cannot exclude any facet of the influences on gold or silver if you want a professional understanding of these markets.

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