"Over the past month, bond markets have fallen and this has pushed up interest rates across the globe, including Japan where rates have increased for first time in a decade. This sort of instability is great for precious metals," said Cooper.
He noted that this environment could fundamentally transform the outlook for investors in 2011. "Bond prices move in the opposite direction to interest rates and they are now falling. Real estate values also fall as mortgage rates go up, and this is another scenario to look out for. However, the signs are that many investors are presently ignoring the impact of rising interest rates on stock markets. Indeed, the US stock market optimism back to pre-crisis levels."
He warned that as interest rates go up then stocks have to pay higher dividends to compete and the only way for dividends to rise is for share prices to fall heralding in what he calls 'part two of the global financial crisis'.
Cooper observed that investors are increasingly drawn by precious metals. "Gold and silver may not pay interest, but with stocks volatile and currencies in crisis, investors will look for the safe haven that precious metals could provide at this juncture," he said.
He said that gold and silver prices could still rise quite considerably, making precious metals one of the safest investment bets of the New Year. For the latest updates PRESS CTR + D or visit Stock Market news Today
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