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What’s Behind the Slide in Gold and Silver?

By Gary Dorsch, of Global Money Trends Magazine.

Excerpt:  After watching the price of silver soar to as high as $15 /ounce in May 2006, Warren Buffett, the “Oracle of Omaha”, offered some sagely words of wisdom:

“What the wise man does at the beginning, the fool does at the end. At the start of the party, the punch is flowing and everything’s going well, but you know at midnight, it’s all going to turn into pumpkins and mice. People think they’ll be able to get out just before midnight, but everyone else thinks that too. The problem is that, in commodities there are no clocks on the wall.”

Nine years earlier, in 1997, Buffett had begun accumulating 130-million ounces of silver, or nearly one-third of the entire world’s supply, at roughly $4.50 per ounce for around $572 million. His public announcement of the silver purchases sent the price up to $7.50 an ounce from just under $6.00 in a few weeks. Then it was discovered that Mr. Buffett was taking delivery of March silver while selling July futures contracts. As quickly as silver prices soared, they plunged.

But by May 2006, silver was spiraling higher again, doubling to $15 /oz, and Buffett lamented before his shareholders that he had sold his silver too early and did not profit much from the sale. Still, Buffett’s warning of a commodity bubble that was ready to deflate was initially proven correct when silver tumbled 32% and gold fell 24% over the next five weeks. Other key commodities, such as copper and crude oil, fell by a third by year’s end from their peak levels that year.

Read more here.