Thing is - precious metals are a store of wealth. The value of the metal isn't changing - what's changing is the value of the dollar. I work both sides of the market - meaning I keep precious metals around as a form of wealth if the SHTF and the dollar collapses. But in escrap, I'm playing the speculator side - should I hold it in hopes it will go up or dump it before it goes too low?
Until Europe, especially the PIIGS (Portugal, Ireland, Italy, Greece, and Spain), particularly Greece get things sorted out we're going to stay on a roller coaster. As the PIIGS bring down the euro, it causes the dollar to strengthen. A strengthening dollar means it takes less dollars to buy precious metals. Once the euro starts getting stronger, the dollar will weaken, causing precious metal prices to go up (relatively speaking that is).
Base metals are another story. Here, it's the BRIC (Brazil, Russia, India, and China), especially China, nations that are hurting the market (although the PIIGS aren't helping - the whole strength of the dollar thing). As the dollars gets stronger, their currencies weaken (although they manipulate their currencies more than most). This is causing them to hold dollars rather than spend them on infrastructure. With infrastructure spending going down, there is less demand for base metals such as copper, aluminum, and steel.
Add to that the instability of oil due to problems in the Middle East and it's a wonder we have a working global economy at all. We certainly don't need $2 billion surprises out of our big banks (you listening Jamie Dimon?).
For everyone with the wherewithal, get a financial advisor. For those of you more dependent upon the price of gold, get advice on how to hedge against losses if the gold market goes down. Done correctly, you can make money whether the price of gold (or any other commodity) goes up or down. Risky play - try to make money when the market goes up or down. Conservative play - limit your losses if the market goes down (this will also limit your gains if the market goes up though).
Want a really scary thought? In just silver alone, there are 10 times as many derivative contracts in existence as there is physical silver. People are playing with a piece of paper that says they own so many ounces of silver - but if everyone tried to cash in those pieces of paper at once...chaos.
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