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The cat is out of the bag, and the message is clear: Gold and silver are headed a good deal higher before this multi-year bull market has run its course.
Central banks, hedge funds, and a new generation of gold investors have stepped into the relatively tiny market for gold bullion in a way that speaks to a broad secular shift in attitudes toward the nearly forgotten "barbarous relic."
While you listened to your Aunt Bertha's annual Thanksgiving story about that time she walked to school barefoot through three feet of snow, markets around the world reeled from Dubai World's pronouncement of a six-month moratorium on debt obligations. The shortfall is essentially akin to a sovereign default by Dubai, and it raises the specter of additional sovereign defaults as the global financial crisis continues to rear its head.
The implications for potential credit losses by Western banks at the hands of Dubai's shortfall may have fed some liquidation of the destabilizing U.S. dollar carry trade, which in turn may have played a role in a sharp reversal in gold and silver Friday morning. Before Black Friday bargain-hunters stepped in, shares of the SPDR Gold Shares (NYSE: GLD ) ETF opened 3% lower than Wednesday's close, while the iShares Silver Trust (NYSE: SLV ) traded almost 5% lower.
The same story -- and I'm not referring to your Aunt Bertha's tale -- was told throughout the mining sector. The Market Vectors Gold Miners ETF (NYSE: GDX ) gapped down almost 5% at the open. Miners Yamana Gold (NYSE: AUY ) and Goldcorp (NYSE: GG ) both trimmed more than 6% at the opening bell, while popular silver producers Hecla Mining (NYSE: HL ) and Coeur d'Alene Mines (NYSE: CDE ) dropped more than 7% from Wednesday's close.
Like Black Friday enthusiasts lining up at the door before dawn, you had to be ready to catch that short-lived sale. Bullion and the miners alike have promptly regained some of their luster.
I believe that the unwinding excess of Dubai's explosive growth is symptomatic of a global deleveraging process that we simply can't avoid, no matter how many liquidity injections or stimulus packages we throw in its path. The next domino to fall could create a much larger unwinding of the dollar carry trade, sending far greater shock waves through the precious-metals markets.
If that happens, and gold and silver retreat abruptly, Fools might just see their last chance to gain exposure to precious metals at prices they will one day deem akin to a Black Friday free-for-all. To close with another idiom: The ball is in your court.