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I have always been fascinated by what motivates people. What motivates Tiger Woods to pursue the goal of being the world's greatest golfer?
What's the motivation driving Warren Buffett to continue purchasing companies instead of retiring in Tahiti?
Or how about the motivation behind the trucks allegedly packed with euros parked in front of the Central Bank in Nicosia?
What is most puzzling is the motivation driving investors to buy or sell their equity positions when research shows that holding an investment over the long-term is more successful than timing the market.
As Business Insider puts it, there's "proof that [investors] stink at investing." Its headline is catchy, and the chart shows the evidence, as the average investor has significantly underperformed oil, stocks, gold and bonds in the past 20 years. While, on average, investors returned 2 percent, oil, stocks and gold rose about 8 percent.
After inflation, the average Joe or Jill actually lost money.
In Gold, Not Cyprus, We Trust
Global investors had to muster the courage to keep calm as news of Cyprus' proposed partial theft of all bank deposits took Wall Street by surprise, closed the country's banks and drove the gold prices higher.
The thoughtless idea was intended to capture a portion of the $31 billion in bank assets held by Russians. According to the Financial Times, Cyprus has developed a "well-earned reputation for being a haven for dirty money from Russia."
Although Cyprus' government came to its senses and blocked the proposed seizure, the damage has been done. To many people around the world, raising income taxes may be one thing, but changing the rules to steal hard-earned savings from all citizens rattles their confidence. What Adrian Ash of BullionVault says is "most amazing" about this situation is that "small savers are no longer sacred."
It's remarkable to see the response from Cypriots, as they protested in the streets, with "NO" stamped on their palms, demanding the government take its hands off their money. It's refreshing to see their pushback to sanity.
How did this tiny island make it into the European Union (EU) in the first place? The Financial Times gave an insightful background:
"Many EU leaders had been deeply reluctant to admit Cyprus into the union in 2004, without a peace settlement that reunified the island. But Greece had threatened to veto the entire enlargement of the EU - blocking Poland, the Czech Republic and the rest - unless Cyprus was admitted. Reluctantly, EU leaders succumbed to this act of blackmail."
Is London Manipulating Gold and Silver Prices?
As we've explained before, manipulation of gold and silver prices is happening right here in the United States.
Our Global Resources Specialist Peter Krauth interviewed silver market analyst Ted Butler last year, who explained how big financial institutions were using high-frequency trading to depress silver prices.
Don't Shy Away from Investing in Gold
The most actively traded gold contract, for April delivery, rose $2.70, or 0.1%, to settle at $1,590.70 a troy ounce on the Comex division of the New York Mercantile Exchange.
"The gold market is getting propped up by a break in the dollar index," Ira Epstein, director of the Ira Epstein division at the Linn Group, told The Wall Street Journal. "The problem is, people are not buying into the rally, they're buying it on the dips."
If gold prices cross the psychologically important $1,600-an-ounce level, confidence in investing in gold could strengthen.
Until then, it looks like investors will stay busy trying to profit from the record-high Dow.
Gold Prices: Don't Ignore This Bullish Trend
Gold prices have been languishing in recent weeks as investors have been drawn into riskier assets such as equities.
New highs in major world stock indices including the Dow Jones Industrials and the Nikkei 225 have investors looking for higher returns.
"Investors are not really looking for safe havens at the moment," Eugen Weinberg, head of Commodities research at Commerzbank, told Reuters. "Gold as inflation protection should get more demand from investors in the second half of the year. Right now, the market participants are looking for more yield and they're finding it in other asset classes like equities."
In fact, the amount of gold held by the SPDR Gold Trust (NYSE: GLD) has been declining since it peaked on Dec. 10, 2012. It was at 1,353.35 metric tons then and now stands at 1,244.86 metric tons as money has flowed out of precious metals and into financial assets.
But not everyone is shunning gold - and you shouldn't, either.
Gold and Silver Prices Boosted by These Global Moves
Gold and silver prices both marched toward their largest gains in more than a week Tuesday joining the uplifting mood on Wall Street. As the Dow Jones Industrial Average reveled in a historic rally that took the benchmark to a record high, commodities also soared.
Gold prices settled Tuesday's trading session up $2.50, or 0.2%, at $1,574.90 an ounce, supported by stimulus chatter and a weaker dollar. The safe haven metal had reached as high as $1,585.80 an ounce intraday, on course for its biggest leap since Feb. 26.
Year-to-date, gold has dipped 5.7%. The commodity logged its fifth consecutive month of declines in February, marking its longest stretch of declines since 1997.
Silver prices rose 1.7% to $28.97 in early trading, their biggest gain in more than a week. The white metal ended the day at $28.81.
While silver's slip since January has been more modest than gold's, it's well below the $34.89 it traded at during the same period a year ago.
But loose monetary policies worldwide, geopolitical uncertainties, rising oil prices and renewed fears of inflation should support, if not boost, both gold and silver prices in the months ahead.
Aggressive Global Stimulus Here to Stay
Driving gold and silver prices higher Tuesday were comments from Federal Reserve Vice Chairman Janet Yellen.
At the National Association for Business Economics conference Monday, the Federal Open Market Committee's (FOMC) Yellen defended the bank's $85 billion a month of bond purchases.
"At this stage, I do not see any (risks) that would cause me to advocate a curtailment of our purchase program," Yellen said.
Yellen's sentiments mirror that of Fed Chief Ben Bernanke, who thinks continued stimulus will be good for the U.S. economy. Acknowledging there are risks from the Fed's aggressive efforts to stoke the anemic U.S. economy, Yellen added there are also risks from not being aggressive enough.
This news from overseas is also bullish for gold and silver prices...