When one looks behind the G20 spin, there would seem to be little substance for the euphoria which appears to have pushed markets up with the hope that the bottom has been reached and that now the only way is up!  This total change in perception by investors has reduced the safe haven appeal of the precious metals and both gold and silver have been marked down over the past  few trading days - gold by around 6% or more and the more volatile silver by around 10%.

But general market reaction, with indices rising on the G20 announcements, has already become muted and the feeling that the G20 hype was more of a PR exercise to try and convince a sceptical world that the authorities have got matters under control is taking hold.  There may well be some green shoots of recovery around, but not yet sufficient to be able to withstand further wintry adverse market reactions as more failures are announced, more people become unemployed and the likelihood that there are still some major institutions out there that are yet to go to the wall - even some countries still look very vulnerable to default despite all the promised new money for the IMF which, on a second look is mostly nothing of the sort.  So don't bail out of gold yet.  There are still some very stormy waters out there where safe haven protection will continue to be a wise move.

The initial downturn in the gold price came alongside some very misleading - or perhaps downright dishonest - statements from various politicians with axes to grind against gold suggesting that a lot more of the IMF's metal than the already announced 403.3 tonnes would be sold for the benefit of poor countries.  Of course nothing of the sort was agreed and the IMF has since been forced to clarify the matter with a statement that no talks were held regarding the sale of any more of the fund's gold, and even the sale of the amount agreed upon last April has still to be ratified.

Indeed most of the vast sums of Monopoly money bandied about in the post G20 statements as being forthcoming to ‘save the world' is not new money either.  But in terms of generating sufficient hot air to turn the markets the G20 has to be deemed a one-week wonder.  One suspects that once the week is past we will be back to roughly where we were before the event took place.

There are still some horrendous pitfalls out there.  What was described to me today as the world's biggest ponzi scheme, which makes Bernie Madoff's activities just appear as small change, has yet to implode, although it looks as though it may be beginning to do so.  In one word that is Dubai where feverish attempts are apparently being made by the sheikhs to ward off total economic collapse.  Expatriates are deserting the Gulf state almost as quickly as they can find seats on airplanes out.  Huge swathes of apartment blocks lie empty and, my source tells me that those wanting to sell out are being pushed into time-controlled sales, supported by the government, not that there are any buyers, as too much coming on the market at once would lead to the equivalent of a run on a bank.  And given the trillions of dollars in investment that have gone into the state a run on Dubai would be disastrous for the global economy and the banks that are involved.  It is effectively another subprime mortgage fiasco waiting to happen.  You might want to question your bank's exposure to Dubai.  Undoubtedly the risk is spread globally just like the subprime markets.

Add to Dubai serious problems still in Eastern Europe and even in some Western European countries  and things may yet get worse for the bankers before they really start to get better - so don't get rid of your safe haven gold yet.  It remains the best, and perhaps only, insurance against further financial collapses, and should eventually perform well when inflation strikes, which it inevitably will given the huge volumes of fiat money being pumped into the global economy.

And as for base metals - they seem to have benefited from the G20 just as gold looked less strong, but the industrial upturn hasn't even started to happen yet thus there is the likelihood that the recent price gains could well be shortlived and reversed.  In the long term base metals are a good bet with all the cutbacks and deferrals out there leading to supply shortages down the road, but long term is probably a year or two, or more away still.