Uncertainty Clouding Prospects for both the U.S. Economy and Gold/Silver Bullion

Uncertainty is certainly (…no pun intended) nothing new. It’s a persistent fact of life that’s been around in both good times and bad throughout the ages.

But right now seems different – the economy in the U.S. and around the world can be characterized as ‘shaky’ at best. Unemployment in the U.S. is officially hovering around 10-12%…but when you factor in long-term unemployment, part-time workers who want a full-time job and the under-employed, unemployment in America is around 22-24% according to some economists.

While the stock market has rebounded tremendously from its low in March 2009, real estate prices continue to fall in much of the country. Gas and food prices though are climbing here in the U.S. and the around the world. This crippling inflation has been cited as the motivations behind the historic uprisings in Egypt and elsewhere.

Add a loose Fed/monetary policy and eye-popping government and personal debt into the equation, and you’ve got an outlook that’s everything from un-clear to downright terrifying.

Besides the stock market, gold and silver has seen tremendous growth over the last two years as well. In our last month’s post on the markets, we had just come off a historic climb in bullion prices. Silver in particular saw an almost meteoric rise, going to around $50 before plummeting back to around $34.

In the last month, gold and silver have risen off their lows but also seem to be in a holding pattern for the time being. Gold has fluctuated in the $1500 range since, trading for around $1540 today. Silver has also risen off its lows from a month ago but is currently sitting at around $37 an ounce.

Where are things going from here?

As we’ve always said and still think, gold and silver will likely increase in value over the next several years.

The fundamentals of what brought these metals to this point are still in play (…this is especially true for gold. Some even say silver prices will be supported by investors looking to leverage gold at a lower cost.)

With the latest unemployment, housing and GDP numbers causing concern the economy may indeed be slipping back into recession, many are anxiously awaiting word on the future of Q.E. II, the Fed’s program for buying government bonds.

Will that continue past June 30^th?

Will the debt ceiling in the U.S. be raised or not and what effect will that have on precious metal prices?

Sovereign debt concerns in the U.S. and Europe are also adding to the uncertainty. Greece and Ireland are in default as other ‘euro’ based countries are feeling the strain of this burden.

Either way, we think both gold and silver have good support for the levels they’re at right now. There certainly will be fluctuations going forward. More troubles in Europe would certainly spell a short rally for the dollar and in turn, cause gold and silver priced in dollars to go down a little bit.

Ending QE-II may temporarily cause a dollar rally and cause gold/silver bullion priced in dollars to go down a little bit. Keeping QE-II alive will certainly add fuel to inflation concerns and provide much support for higher bullion prices.

But remember from prior posts on the matter…price decreases can mean good buying opportunities. It’s important to consider that it’s not the dollar amount that’s key, it’s the physical number of ounces you own that’s important.

As instability continues, more and more people will be looking to these versatile assets to preserve their wealth…word is many institutional investors are showing more interest in gold.

Junk 90% silver is a great way to get your feet wet if you’ve never purchased bullion before. If you’ve been waiting for a good opportunity to jump in, now may be the time.

Provident Metals has a wide range of gold, silver and other precious metal coins and bars for sale…visit the main site for current prices.