Thursday, June 7, 2007

The Toast Is Burning

Dollar firms on reports North Korea has test-fired short-range missiles
Thu, Jun 7 2007, 10:56 GMT

LOL! Woe those that buy the US Dollar in a "flight to quality". If the only reason for this mornings "firmness" in the dollar is this "news", then it shouldn't be firm for long. Why would anybody buy the US Dollar? Where's the quality? BUY GOLD.

Investors have yet to wake up and smell the toast burning. The Dollar is toast. When they do wake from their decades long slumber, and realize that the Fed has robbed them blind, they will begin what will become a stampede into Precious Metals. The mad rush of the "investor class" into these tiny markets will send the metals to heights never seen.

Jason Hommel in his piece The Tiny Size of the Gold Market explains with numbers how small the Gold Market is relative to all the money in the world. It really is quite an eye opener. Especially in light of how quickly the world's central banks can print money in relation to how slowly Gold is pulled from the mother earth.

...the world is creating new money at about a rate nearly 100 times faster than the world's value of new gold.

With gold now rising since the bottom in 1999 or 2001, people are now beginning to look at gold, and paper money, they are beginning to discover the relative size of these markets...

...investors, the world over, may have about $40 trillion worth of investments to allocate and spend on gold. What if 5% of that went into gold? That's $2 trillion dollars...

What will happen when that much money is going to move into gold, when the world's annual gold production is a mere $54 billion?

Today, we have many confirmations of major gold buying, on the horizon. China will be buying someone's gold. CalPERS manages over $234 billion for California employees, and is bullish on commodities now, including gold.

I read that "Barclays Capital did a survey of their institutional clients and 70% of them said they would have 5% of their assets in gold in three years time."

I don't know what these money managers are thinking. If they knew about the relative size of the gold market, the price would be $2000/oz. by tomorrow morning. As it is, the gold price is likely to hit $2000/oz. within 3 years, and most will still miss the big easy gains.

Novartis' recent announcement that it intends to invest 4% of its nearly $11.5 billion pension fund in gold, silver, platinum and palladium is just the tip of the investing iceberg that will sink the US Dollar and crush dem Rat Bastids that are propping it up. As inflation continues to heat up globally, the strategy to diversify into something of real value is likely to gain new and unexpected buyers of gold and the other metals.

PATIENCE. Axl Rose may be a nut case, but Axl said it best in the Guns 'N Roses classic, "...all you need is a little patience..." PATIENCE. Just a little patience will go a long way in containing any frustrations you may have with the Precious Metals markets. These markets are NOT for day traders, they are for "swing traders" if you must trade. Sell a portion of your position into strength, and buy it back on weakness. Otherwise, sit on your hands and watch as Gold steam rolls the US Dollar.

Silver Resistance: 13.66 / 13.70 / 13.78

Silver Support: 13.58 / 13.49 / 13.42
________________________________All prices SPOT

Gold Resistance: 672 / 675 / 681

Gold Support: 668 / 664 / 662

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