After Correction, Gold and Silver Set for Big Rally

After Correction, Gold and Silver Set for Big Rally – Puru Saxena

Interview Highlights:

Kitco News held an exclusive interview with Puru Saxena of Hong-Kong based Puru Saxena Wealth Management; here are some of the highlights. Click to watch the full interview below:

QE3 Would Ignite Silver

Silver has been in a massive uptrend for last year says Saxena and it has completed its consolidation phase, says Saxena. “The technicals for silver look super here and if and when Bernanke does QE3 – silver is going to ignite,” he says. Saxena says at the moment roughly 15% of assets he manages are allocated in physical silver.

“We warned about a big silver correction in April when everybody thought silver was going to 400-500,” says Saxena. He started buying silver again at the $33-$34 mark and recently added some more to his portfolio last week, he says.

More Corrections for Gold?

Over the last 10 years, gold’s advance has been “orderly,” says Saxena. “We didn’t really have any massive spikes; however, about two to three months ago, I felt gold was going to do its thing this year,” Saxena says.

Saxena says he could see gold going parabolic over the next six to nine months. “I wouldn’t try to be too clever by timing gold here or trading gold I think the correct thing to do in the latter stage of a bull market is to take a sizeable position and simply ride it out for the duration of the bull market,” he adds.

Friday’s Jackson Hole Meeting

Saxena says he is not so sure whether Friday’s Federal Reserve symposium in Jackson Hole, Wyo., will see a third round of quantitative easing unleashed, but he says an asset buying program is in the cards. “When I look at bank stocks in America, they are down significantly from the highs and that leaves me to believe that Mr. Bernanke will do something to help his brothers in the banking industry,” he says.

It was at last year’s Jackson Hole meeting that Bernanke hinted that another bond-buying round would occur, but the program wasn’t officially announced until November.

The banks are in need of capital and the easiest way to get it is through the Fed Reserve, explains Saxena. “They may not call it QE3 but maybe Operation Twist or Black Storm,” Saxena says, but at some point, he says he believes there will be assistance from the Federal Reserve.

Indian Gold Imports

Gold imports by India, the world’s biggest consumer, may reach a record 1,000 tons this year as investors seek a haven against inflation and volatility in stock markets. Saxena says the bull market in gold is not just about Indian jewelry demand or Indian investment demand; it is about global investment demand.

People all over the world are shunning paper currencies, Saxena says. “Even central banks are beginning to see the light of day -- Korea, Mexico, Thailand have been piling into gold,” he says. Saxena adds that the biggest player to emerge might be China’s central bank. “It only owns about 2% of reserves in gold…at some point the Chinese are going to buy gold in large quantities and I wouldn’t be surprised if the Chinese have secretly been buying into gold,” he says.

By Daniela Cambone of Kitco News dcambone@kitco.com