"Did anything specifically happen on Friday that fundamentally changed any of the underlying reasons for owning both gold and silver?" If you anwsered no then read a very good article by Erick Parnell on Alpha.
Gold and silver took a beating on Friday. After gapping lower at the open, the precious metals ended the day down -1.43% and -1.97%, respectively. These declines are just the latest in a series of setbacks that have struck the metals over the last few weeks, as both gold and silver are now respectively -5% and -8% below their year-to-date highs reached in mid-January. This recent poor performance has been gut wrenching for those that are long the metals, particularly in an environment where the stock market seemingly cannot trade lower for 30 minutes in any given trading day without being prodded back higher. So following this latest setback on Friday, it is reasonable to raise a critical question about gold and silver. Is it time to relent on these positions, or should conviction be maintained?
Time horizon is the first important point that must be examined when answering this question. Put simply, precious metals are not well suited for those investors with a short-term time horizon. This is due to the fact that gold and silver prices are highly volatile and can experience wide swings over short-term periods of time. And Friday was no exception in this regard. Other than those market participants that are experts in trading the metals, investors that own gold and silver are better served to view these allocations with a long-term time horizon in mind.
Those owning gold and silver as a long-term investment typically have a fundamental thesis for owning these metals. Such views may include but are not limited to the following: hard asset protection against competitive currency devaluations and inflation, a safe haven in a possible crisis scenario, an alternative reserve currency that is protected from being debased by policy actions and potential industrial demand in the case of silver.
This, of course, leads to the next logical question. If you own gold and silver as an investment, did anything specifically happen on Friday that fundamentally changed any of the underlying reasons for owning both gold and silver? The answer here is plainly no. While some cited rhetoric leading up to the G20 meeting against central banks that are aggressively debasing their currencies as a reason for the decline, this is a most obtuse reason if it is indeed the cause. After all, does anyone really think that the extraordinarily aggressive monetary policy actions by central banks from around the world will be curbed in any way by some passing comments at the G20 meeting? Sure, we'll get the customary statements about monetary responsibility and the desire for sound currencies, and then everyone will go back home to kick the printing presses back on at full power. If anything, the magnitude of the decline on Friday was far more likely due to a recent void in demand from China due to their New Year holiday coupled with thin trading volume in the U.S. ahead of the holiday weekend.
One important and simple fact continues to robustly support the investment thesis for continuing to own both gold and silver as an investment despite the recent volatility. As long as global central banks are rampantly printing money, the longer-term influences on gold and silver will remain meaningfully to the upside.
more at: http://seekingalpha.com/article/1199661-it-s-gut-check-time-for-gold-and-silver?source=email_portfolio&ifp=0