Your Last Chance to Buy Cheap Gold and Silver

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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.

Gold is a hot topic on the blogs at Motley Fool CAPS. Join the free service today and see just how many Fools are taking the long view when it comes to investing in gold. The "Gold" tag at CAPS lists 47 potential investments, and you'll find Christopher's comments on most of them.

The Fool owns shares of iShares Silver. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Christopher Barker can be found blogging actively and acting Foolishly in the CAPS community under the user name TMFSinchiruna. He tweets. He owns shares of Coeur d'Alene Mines, Hecla Mining, and Yamana Gold. The Motley Fool has a gilded disclosure policy.

Read/Post Comments (7) | Recommend This Article (47)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 27, 2009, at 1:14 PM, sofpan wrote:

    In times of economic system failure, like nowadays (doesn't matter if we have an inflation or a dflation depression) GOLD is The Hedge.

    The decline of Gold in early Friday was just the result of dollar's ascent and maybe, some profit taking.

    But now that times are difficult ---> GOLD!!!

    A year later than now, you would wish to have bought gold in todays price levels.

  • Report this Comment On November 27, 2009, at 8:44 PM, silverbull09 wrote:

    An easy and cheap long term way to get silver eagle bullion coins super cheap is to check out

  • Report this Comment On November 30, 2009, at 10:27 AM, davion13 wrote:

    Your last chance to buy gold was this time 1 year ago before the 50% increase.

    Buying now would a poorly timed mistake.

  • Report this Comment On November 30, 2009, at 10:27 AM, davion13 wrote:

    Your last chance to buy gold was this time 1 year ago before the 50% increase.

    Buying now would a poorly timed mistake.

  • Report this Comment On December 04, 2009, at 2:11 PM, TWOTIMETUNA wrote:

    buy canned goods. At least you can eat them.

  • Report this Comment On December 04, 2009, at 2:19 PM, xstyeve wrote:

    i sure wouldn't buy or sell now

  • Report this Comment On December 06, 2009, at 12:29 PM, Havanero61 wrote:

    Gold bugs will be gold bugs, but the market dropped on news that can be at best described as mixed ie a smaller than expected jobs lost. Any real positive news will crash the gold market.

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