Tuesday, November 27, 2007

It's 1984

Citi Sells Stake to Abu Dhabi Fund- AP
Citigroup said late Monday that the Abu Dhabi Investment Authority will invest $7.5 billion in the nation's largest bank, offering needed capital to offset big losses from mortgages and other investments.

Dow Closes Up 215 After Citi Secures Capital- AP
Wall Street rebounded Tuesday after the Abu Dhabi Investment Authority said it will invest $7.5 billion in Citigroup Inc. -- a vote of confidence for the nation's largest bank, which has suffered severe losses amid the ongoing crisis in the mortgage market.

OK... So let me get this straight: The world's largest bank is teetering on the brink of destruction...THE WORLD'S LARGEST BANK...and so desperate to save itself, that it accepts a pithy 7.5 billion Dollars from an Arab investment group to help it stay solvent. THE WORLD's LARGEST BANK accepts what amounts to charity from a bunch of rich Arabs and suddenly the whole world credit crisis is resolved? You have got to be pulling my leg. WAKE UP you dumb asses on Wall Street! If you ever needed proof that this "crisis" is worse than anybody can conceive, this is it. This "investment" is not "good" for anything. This is a sign of how bad things are, and how much worse things are going to get.

So the stock market goes up because Citibank has been saved with a $7.5 billion ? Ha! Where's the next $7.5 billion going to come from? And the next $7.5 billion after that? Bank of America "invested" $2 billion in Bear Sterns three months ago. The stock market "rose as a result". Today, Bank of America has seen all but a tiny portion of that $2 billion investment vaporize. Not to mention the fact that the stock market is a lot lower now than it was three months ago...AND Gold a lot higher. Abu Dhabi could throw every last Dollar they have at Citibank, and it won't change a thing. Parlor tricks and lunchroom magic are NOT going to save the world financial system. The Great Gold Sale continues...buy more now, while supplies last.

Oil Off on Economy Fears, OPEC Forecasts
NEW YORK (AP) -- Oil prices plunged Tuesday, picking up downward momentum amid concerns that a slowing economy might reduce demand for crude just as OPEC members are considering an increase in production. Prices were also pressured by apparent progress at the Mideast peace summit in Annapolis, Md.

Look fools, the price of Oil hasn't risen to within a whisper of $100 a barrel because there is a "production" problem. Oil is knocking on the $100 door because the value of the US Dollar has all but collapsed. Even IF the Arabs could produce more Oil [they are already producing as much as they can] it won't make the Dollar rise in the Forex markets. The price of Oil has doubled this year alone, AND DEMAND HAS NOT FALLEN. Gasoline demand in this country has actually risen this year along with the rise in the cost of gasoline at the pump. These headlines are a load of crap, and only are intended to deceive and give false hope to the sheep that stare at the evening news for their daily dose of doublespeak.

A Brewing Storm
Gold Poised to Move in 2008

Events are aligning to provide a bullish fundamental foundation that could push gold significantly higher in 2008. While volatility will likely remain a feature of the metals market, the price could begin to march higher as the markets react to gold’s strong fundamentals. The cable channel “experts” keep calling for a top in gold, much as they have for oil all the way from $20 per barrel on up. Once again it appears this is wishful thinking more than analysis based on the fundamentals.

“Tony Fell, chairman of RBC Capital Markets, said the world money supply has been growing by 5-10%, while the stock of mined gold has been rising by 1.6%, creating a mismatch that must be covered. Mr. Fell says the total debt burden in the US has exploded to 340% of GDP, in stark contrast to the steady levels of around 150% in the post-War era. It almost insures further dollar debasement. ‘We’re in the very early phases of a prolonged bull market,’ said Fell. RBC argues that the global dollar system known as Bretton Woods II is ‘coming apart at the seams’ as Asian, Middle East, and Latin American states start to break down their dollar links to avoid importing US inflation. The result is to resurrect gold, which is fast regaining its role as the world’s benchmark currency.”

Peak Gold
The global demand for gold is clearly outstripping supply. Global gold production was down 3% in 2006 and is nearly flat this year. South Africa’s output is down to its lowest level since 1932. According to Barrick Gold CEO Gregory Wilkins, “There’s not much gold out there.” Barrick recently told industry analysts that gold production will fall 10-15% below market expectations over the next three to five years. There appears to be a growing price-inelasticity for gold, as higher prices are not bringing more gold to market. (In addition, any future de-hedging by hedged producers like Barrick will add to gold buying demand.)

Investors are beginning to understand that massive global money creation may just lead to massive currency depreciation. New gold demand is created as buyers are looking at gold as an alternative currency and a store of value. Yet the supply of gold continues to grow very slowly in relation to demand. This is precisely the mirror opposite of the fiat dollar. This supply/demand imbalance will underpin higher gold prices in 2008.

While it is true that western central banks could begin dumping gold onto the market, who would be the buyers? China, Russia, the Middle East, and India would likely be enthusiastic buyers to hedge against their large dollar reserve positions. Selling a scarce and appreciating asset to cap the price for a few months may not seem logical, but it’s happened before. And it may happen in 2008, but as in the past, the effects will be short-lived. The longer lasting effects may be on the western central banks as they sell their legacy of tangible wealth on the cheap once again.

Gold mining shares should profit from higher gold prices, but higher mining costs, estimated at 15% annually, have taken a toll the last few years. But as gold continues to climb, the quality producers will likely enjoy substantial leverage over the price of gold. Another group to look at would be the gold and silver royalty companies, which have no exposure to higher mining costs or liabilities.

With up being down, and down being up in 1984, chart analysis would seem a bit ridiculous at this time. We all know Gold AND Silver should be substantially higher than they are today. Sit tight, be right, and ignore this noise. It will pass shortly. Suffice it to say: Gold and Silver remain at sale prices relative to inflation. Buy now while supplies last, and laugh later.

Monday, November 26, 2007

Bullshit Reigns Supreme

MUMBAI: A weaker rupee coupled with rising international gold prices have led domestic gold prices to an all-time high of Rs 10,695 on Monday. Gold prices in the global market continued to move up as investors, fearing a credit crisis, stocked up on the yellow metal as a safer resort.

International gold prices hit a two-week high, as concerns over a weakening dollar spurred buying activity. The dollar traded near a record low against the Euro and crude oil prices in New York rose for a second day to above $98 a barrel.

Spot gold prices in London touched $836.70 a troy ounce in day trade, the highest since November 9, when they broke a 28-year record hitting $845. Gold prices are up 30% this year as the dollar has fallen 11% against the Euro and crude prices have soared 61%.

In Asia, the precious metal rose 4.8% last week, the biggest weekly increase since July 2006, as bullion is also seen as an alternative asset and hedge against inflation.

But in New York, where physical Gold is a myth and paper futures contracts are used to rig the price, Bullshit Reigns Supreme. Each Day the US Dollar inches towards another new low, yet the price of Gold is held in check by the hucksters on the NY COMEX. The Dollar was down all day today, the stock market gets whacked by the mushrooming credit crisis, and Gold gives up all it's gains made overnight in Asia? Nobody sold any Gold in America today, just pieces of paper that represent Gold that doesn't even exist. It is criminal, it is disgusting, it is infuriating! But do not despair. Hold tight to your metal and mining shares. Every effort to date to stop the rise in the price of Gold has failed. Inevitably these COMEX Clowns will be destroyed.

Gold support remains at 817. Silver must close above 14.90 to recapture it's mojo. The stage is set. Gold, the Truthsayer, will destroy all that attempt to hide the truth.

Sunday, November 25, 2007

The Jig Is Up


Has the U.S. current account deficit grown so large that the world has finally decided not to finance it any longer? The deficit has been growing steadily for well over a decade, and is about $800-billion (U.S.), or just over 5.5 per cent of the size of the U.S. economy. It has long been considered to be unsustainable the moment the world loses confidence in the ability of the United States to carry such a load. Has that moment come?

Heads we Win, Tails you Lose

As internal debates in the Gulf and Asian nations intensify over the need to continue propping up the U.S. economy, dangerous signals this past week from the Fed, Freddie Mac, and Wall Street may be pushing them to finally let go of the lifelines that have kept America afloat. Despite clear signs of surging prices in the U.S., the Fed took a major step in undermining its own credibility with its most recent forecast that inflation would remain below 2% for the next three years. As the forecast clearly paved the way for additional Fed rate cuts, Wall Street ignored its absurdity and heralded the announcement as legitimate good news. The celebration is likely infuriating foreign governments, who must be dumbstruck that the Fed can claim contained inflation at home while the declining dollar is fueling massive inflation problems around the world.

Gold and the U.S.$ Today

In such a climate there is absolutely nothing to stop the price of gold in all currencies from trending higher and higher and higher still.

The trigger to this rise is the awful loss of confidence in the banking system and the investments they have engineered. It is called “risk aversion”, but it is more serious than that. Harsh lessons are being learned from bitter experiences that have shocked even the most experienced of investors. Will the crisis go away we are told, not for some time to come? In fact, it could worsen as the structures on which confidence stands stumble under the doubts and fears.

Then it becomes simply a matter of prudence and wisdom for investors of all types in all parts of the globe to protect themselves against this turmoil in something that is not an obligation, a promise, something not dependent on the performance of people or any other hope. Where can they go? They need something they can know will not evaporate as quickly as a changing exchange rate, something they can grip in their hands, something solid that has proved itself in just these sort of times - gold.


Don't be deceived by "news" of "strong holiday sales" this past weekend. Everything is "on sale" in an effort to salvage something from the "holiday shopping season". And nothing brings out the plastic like a sale. Americans are addicted to buying, and binge buying on the "plastic" is the rule of the day. There will be NO profit from these sales, just an increase in our national mountain of debt.

The world has caught on to the lie that is the US Dollar, the US Federal Reserve, and the US Treasury. The jig is up. The world is on the cusp of a Gold Rush. The Comex shorts are on the eve of destruction.

Gold and Silver began trading this evening in Asia strong. Silver has banged on the first Fibonicci line of resistance at 14.90. The Gold Bulls remain in control, with support at 817. Every effort will be made to halt Gold's rise back towards the magic $850. Today is Monday, and it never fails that the Dollar opens the week with a bid. Of course it is quickly kicked aside by those anxious to sell this toxic waste. The magic recovery of the Dollar Friday is only a snapshot of the desperation the central banks face in trying to keep the Dollar from plunging dramatically. One more trip down for the Dollar like Friday's visit to the low 74s, and Gold is on it's way to 900.

Tuesday, November 20, 2007

Moderate Inflation Is A Bald Faced LIE

Bull riding is a rodeo sport that involves a rider getting on a large bull and attempting to stay mounted for at least 8 seconds. The rider tightly fastens one hand to the bull with a long braided rope. It is perhaps the most famed of all the rodeo sports.

A rider mounts a bull and grips a flat braided rope. After he secures a good grip on the rope, the rider announces he is ready. The bucking chute (a small enclosure which opens from the side) is opened and the bull storms out into the arena. The rider must attempt to stay on the bull for at least eight seconds, while only touching the bull with his riding hand. His other hand must remain free for the duration of the ride.

The bull bucks, rears, kicks, spins, and twists in an effort to throw the rider off. This continues for a number of seconds until the rider bucks off or unties after completing his ride. A loud buzzer announces the completion of an eight second ride.

Throughout the ride, bull fighters move about the bull in an effort to influence its movements and enhance the ride. When the ride ends, either intentionally or not, the bull fighters move in to protect the rider from harm.

Several days ago I began to warn of the growing threat of increased volatility in the Precious Metals markets. That threat is now reality. Moves up like we saw today, and moves down like we saw on November 11 are about to become MUCH more common. From the description above it is not a stretch to understand the Gold Bulls primary objective: to throw you off the ride. If you want to get to the moon on this ride, you will have to stick to your convictions, and hang on to your positions through the exhilarating run ups, and the gut wrenching whooshes.

WASHINGTON (AP) -- The Federal Reserve reported Tuesday that it expects slower economic growth and a slight bump up in unemployment next year due to the housing slump and a credit crunch. The board also said, however, that it thinks inflation will remain moderate.

Inflation is going to accelerate at a pace that is going to SHOCK people...The Fed is going to lie about inflation until the day they are disbanded. Why? Because they are the root cause of inflation. Inflation is NOT rising prices...rising prices are just a "symptom" of inflation. Inflation IS a rising "money supply". And the Fed along with the US Treasury are printing money like it's going out of style. Think about it like this...how could the Fed continue to cut interest rates to prop up the stock market if they admitted there was an inflation problem on the horizon. The Fed has to continue to cut interest rates, and devalue the Dollar, if the US ever hopes to pay off it's never expanding debt to the world. The Dollar may be our Achilles heal, but it is the rest of the world that may feel the most pain from it's demise.

Net US capital flows failed to meet the current account deficit for the third month in a row. The Treasury International Capital System (TICS) accounted a net loss in totals flows of $14.7 billion; the September figure was revised up to -$150.7 billion from -$163.0. Net long term securities transactions were positive at $26.4 billion; in August the flow was reversed at -$70.3 billion. The current account deficit, commonly called the ‘trade gap’ has averaged a little more than $59 billion per month this year. Long term securities flows have collapsed in the third quarter averaging -$24.7 billion per month; in the first half of the year they measured +$85.9 on average per month. Since mid June the Dollar has depreciated 10.6% against the Euro. Europeans are the largest overseas investors in the United States economy.

The falling Dollar is forcing foreign investors to dump their Dollar related assets, and a big portion of that big dump is going to be US Stocks. Dollar loses in the stock market in New York is only multiplied when the foreign investor repatriates his money home. Stock price losses, combined with currency exchange losses add up to a bad investment. And the USA is quickly becoming a bad investment for foreigners.

You don't have to look far to find ever more reasons to buy and own Silver and Gold.

Monday, November 19, 2007


Gold, Silver Fall as Citigroup Downgrade Sparks Risk Concerns

Nov. 19 (Bloomberg) -- Gold and silver fell as a drop in U.S. stocks curbed investments in riskier assets such as commodities.

U.S. equities declined after Goldman Sachs Group Inc. placed a ``sell'' rating on shares of Citigroup Inc., the largest U.S. bank by assets. Japan's currency rose as traders repaid yen- denominated loans that had financed investments in higher- yielding assets. Before today, gold had gained 23 percent this year, reaching a 27-year high of $848 on Nov. 7.

``Risk aversion continues and that hurts all investments, including gold,'' said Leonard Kaplan, president of Prospector Asset Management in Evanston, Illinois. ``Investors are taking huge losses so they're not eager to invest in anything.''

I'm sorry, but NOTHING could be further from the truth. If you believe this drivel, sell ALL your Gold and Silver now, and NEVER buy it back.

The timing of the Citigroup downgrade to Sell (i.e., with Citigroup already down 30% from its October high), and a warning from reinsurer Swiss Re that it lost nearly $1.1 billion on two credit default swaps, played on investors' concerns that it is premature to think the financial sector has hit bottom.

In a somewhat ironic twist, Citigroup on Friday raised its rating on the U.S. banking sector to Overweight from Market Weight citing, among other things, awful investor sentiment.

A Billion and one reasons to own Gold and Silver...

Sunday, November 18, 2007

Billions Of Reasons To Dump The Dollar, And Buy Gold

Fed Injects Cash Into Financial SystemThe Associated Press - Nov 15, 2007WASHINGTON (AP) — The Federal Reserve injected a fresh infusion of $47.25 billion into the US financial system on Thursday, reflecting normal operations as ...

Fed injects US$32.75 bil. to ease liquidityChina Post, Taiwan - Nov 9, 2007WASHINGTON -- The Federal Reserve injected US$32.75 billion into US money markets Thursday to help ease tight liquidity, the central bank said. ...

Fed injects $41 billion into financial systemUSA Today - Nov 1, 2007The Federal Reserve Bank of New York, which carries out the central bank's open market operations, moved Thursday to inject $41 billion in temporary ...

Fed Injects Cash Into MarketHouston Chronicle, United States - Oct 24, 20072007 AP NEW YORK — The US Federal Reserve has pumped $25.5 billion in liquidity into the financial system so far this week, raising concerns of continued ...

In just the past four weeks, the US Federal Reserve has pumped $146.5 Billion into the financial system. Virtually printing money out of thin air. Little wonder then that OPEC, as a group holding one of the worlds largest hoards of US Dollars, would openly question the validity of the Dollar as the worlds "reserve" currency:

OPEC to Study Effect of Dollar on Prices- AP
OPEC will study the weak U.S. dollar's effect on the oil cartel's earnings and investigate the possibility of a currency basket, Iran's oil minister said Sunday.

Oil is priced in U.S. dollars on the world market, and the currency's depreciation has concerned oil producers because it has contributed to rising crude prices and has eroded the value of their dollar reserves.

If the Dollar was no longer backed by OPEC, there would be no need for nations to hold vast reserves of Dollars to be used to purchase oil. The effect of that decision by OPEC would be not only catastrophic for the Dollar, but for the US Economy...and perhaps even our way of life as we know it. This OPEC Oil / Dollar peg, in a nutshell, is why the USA is involved in Iraq. It is why, "The War on Terror" is vital to the US "national interests". If OPEC kicks the Dollar to the curb, the United States goes with it. In effect, the US Military is out roaming the globe in an effort to "force" nations to use the Dollar as their primary means of trade. The US Dollar is doomed.

Need any more reasons to dump the Dollar and buy Gold?

Bob Chapman, The International Forecaster has good reason to buy Gold:

Well, the mainstream media, the analysts and the pundits are already predicting the downward trend in gold to a price somewhere in the 750 range by the end of the year. The Fed-heads are out jawboning about how we may not need more rate cuts in order to slow gold down and support the sagging dollar as they continue to lie through their Wall-Street-bailing teeth in their desperation to save the commercial shorts from a walk into Crispy Critter Country. They say there will be a big correction in gold and silver this year and prices will not move up until next year. What they fail to mention is that there are still almost 240,000 open December gold futures contracts even after the 22,000 that were closed out on Thursday which undoubtedly accounted for gold's rise to about 818 that day, and that the commercial shorts own most of them, many of which are now still underwater by about $15,000 per contract even with gold stubbornly holding at about 790. Already the open gold futures contracts for February have soared to a very manipulative level of 116,000 contracts as the cartel gears up for the winter/spring rally for precious metals, and as the cartel attempts to intimidate traders and attempts to take the public out of the precious metals markets for fear of a big correction and much lower prices. They hope that everyone will forget about the issue of the 240,000 December gold futures contracts that is still unresolved. Do not be intimidated. Support the large specs in their battle to push gold past 850. Do not let up on the cartel. The gold alarm must be rung so people can be alerted to the coming danger. The covering of 22,000 shorts sent gold from Wednesday's close of 797 to a high late Thursday of 818 before a series of substantial central bank sales brought gold down to 785 on Friday. Can you imagine what would happen to the price of gold if there were a short-covering of many multiples of 22,000 short contracts?

Determining an Appropriate US Dollar Exchange Rate
By: Christopher K. Potter
Northern Border Capital Management LLC

The price of gold should be $2,500 per ounce. While this may appear to be an overly optimistic projection, it is reasonable when analyzed in the context of today’s highly inflationary environment. Inflation occurs when central banks create excessive amounts of money and today we are in the middle of the largest money creation exercise in history. Since 2000, the supply of US dollars has grown by 84% and since the early 1970s, when official dollar convertibility into gold ended, the number of dollars in circulation has grown by over 1400%. That is not a typographical error. In 1971 there were 776 billion US dollars in circulation. Today there are over 12 trillion. Around the world the supply of paper money is growing at a stunning pace. In the last seven years alone, the supply of British pounds grew by 99%; Euros grew by 78%; Indian Rupees grew by 234%, Chinese Yuan grew by 227% and Russian Rubles grew by 1,508%. Because central banks create money at virtually no cost, its supply tends to grow without constraint.

This essay, in it's entirety, will blow your mind. Few things I have read over the past five years can touch this work by Christopher K. Potter. If you don't believe the US Dollar is doomed, and Gold is going to the Moon after reading this essay...you never will.

Need any more reasons to dump the Dollar and buy Gold?
Please click on the chart above to enlarge.

Thursday, November 15, 2007

Investors United For Buying

Gold Q3 demand up 19 pct on investment buying

NEW YORK, Nov 14 (Reuters) - Global gold demand in the third quarter rose 19 percent year-on-year to 947.2 tonnes on the back of robust inflows into bullion investment funds and improved jewelry consumption, industry-sponsored World Gold Council (WGC) said on Thursday.

Total gold demand for gold exchange-traded funds (ETFs) for the third quarter surged to a record 138.0 tonnes compared with 19.2 tonnes in the year-ago quarter, boosted by safe-haven investment buying amid credit market jitters, WGC said in its quarterly "Gold Demand Trends."

"Gold demand has definitely benefited in Q3 from the the flight to quality that has accompanied the growing financial problems sparked by the subprime mortgage crisis," George Milling-Stanley, WGC's manager of investment and market intelligence, told Reuters before the release of the report.

"Investors seeking the proven protection of gold as a safe haven was the driving force behind the growth in gold demand during the period," he said.

The increase in investment demand has replaced jewelry buying as the major source of growth for the third quarter, Milling-Stanley said.

So, that being said, one wonders where the media gets the idea that "investors" are selling their Gold in an effort to avoid risk. It would appear to me that "investors" are buying Gold hand over fist in an effort to avoid risk.

I have said repeatedly that it is the "investor" in Gold, seeking to protect and insure his wealth, that will be the major driver of the Gold price as this second phase of the big Gold Bull Market that began in 2001 becomes established now. Phase One, The Speculator Phase, began the day the markets opened following 9/11, and peaked in May of 2006. Phase Two, The Investor Phase, began in October of 2006...and has yet to meet it's midpoint. Gold and Silver are still bargains, even at these prices.

Tuesday, November 13, 2007


Crude Futures Fall to Near $91 After IEA Cuts Demand Forecast and Iran Hands Over Documents

NEW YORK (AP) -- Oil prices that last week seemed on an inexorable path toward $100 a barrel slid more than $3 to the $91 level Tuesday after the International Energy Agency cut its demand forecasts and said crude supplies are rising.

Prices also fell after diplomats said Iran has handed over blueprints key to its nuclear program, meeting a central United Nations demand and potentially defusing the country's standoff with the West.

BULLSHIT! The price of oil didn't fall, it simply stopped rising. Why? Because the Dollar stopped falling. What you've read above is just an excuse concocted by the media to "explain" the drop in the price of oil. As soon as the Dollar resumes it's inevitable slide lower, the price of oil will resume it's inevitable climb higher. Take that to your broker and BUY GOLD.

Monday, November 12, 2007


Gold futures tumble over 3% as traders rush to sell
NEW YORK (MarketWatch) -- Gold futures tumbled more than 3% on Monday, erasing their gain from the previous week, as a rebound in the U.S. dollar and a spike in global risk aversion fueled profit-taking in the precious metal.

"You are seeing a huge sell-off trade in gold off the back of a massive carry trade unwind," said Zachary Oxman, a senior trader at Wisdom Financial. Carry trades refer to the practice of borrowing low-yielding currencies, such as the Japanese yen, to buy higher-yielding currencies.

"Global risk aversion and fears of further write-downs from subprime losses this week, along with a 4% decline in China's market to start the week off, have all driven the metals and currency markets in a strong counter-trend fashion," Oxman said in emailed comments.

So you sold you Precious Metals today because you are risk averse? LOL! The jokes on you. On August 15, with Gold trading at $668, the "risk averse" bailed out on the Precious Metals as the credit crisis reached the headlines. Gold was down $26 that day. On the very next day Gold closed higher, and proceeded to do so for the next ELEVEN WEEKS., culminating in our recent 28 year highs at 845. It certainly pays to be risk averse in today's economic Armageddon doesn't it?

Gold is NOT a risky investment people, and neither is Silver. Today, they are the ONLY investment. Buy tomorrow's money today at a discount. If Gold is a risky investment, what does that make an investment in Citicorp? Citicorp, despite what clowns like Larry Kudlow might have you believe, is NOT a value play in today's market mayhem...but Gold and Silver are. They were a bargain eleven weeks ago, and they are still a bargain today. Gold will still be a bargain at $1000. Back up the truck...Gold and Silver are on sale. While supplies last.

For more please click on the charts above to enlarge and enlighten.

Sunday, November 11, 2007

Friday, November 9, 2007

Gold: The Currency Of Choice

“Bernanke’s remarks today were not clear in their support for the diminishing US Dollar. Integrity in our financial institutions and the US Dollar are falling quickly. Restoring confidence is very difficult to undertake with current circumstances and the result is greater interest in real money. Gold’s integrity does not need to be questioned and that brings a level of confidence the US Dollar simply cannot produce as it loses its global appeal. Over the coming days and weeks, I would expect an attempt to stabilize the situation because at the current moment, it appears to be getting out of control. The big question on my mind is: Are the mechanisms of control used to stabilize situations able to do so at this time? Or is the situation so much larger that it is at the mercy of the free markets forces?
This is not a time I would want to be short gold or out of gold. Times like these are precisely the reason investors have gold and silver in their portfolios. It is an insurance policy against circumstances we are witnessing at this time.”

- Peter Spina, www.goldforecaster.com

I could not have said it better.

Volatility is rising in the Precious Metals markets. This is to be expected. Respect the volatility and stick with your convictions. The Dollar has few if any friends right now. Gold is a rising star...in times of economic uncertainty, Gold is the currency of choice.

Thursday, November 8, 2007


The trip to the Moon has begun. This is our first trip to the Moon, so a few bumps along the way should be expected. At this time we should be buying the dips in Gold and Silver. NEVER short a Bull Market. And NEVER NEVER short a short squeeze.

Our Gold chart above shows the development of a Flag Pattern:

Flags are short-term continuation patterns that mark a small consolidation before the previous move resumes. This pattern is usually preceded by a sharp advance or decline with heavy volume, and marks a mid-point of the move. To be considered a continuation pattern, there should be evidence of a prior trend. This move usually represents the first leg of a significant advance or decline and the flag/pennant is merely a pause.
A flag is a small rectangle pattern that slopes against the previous trend. If the previous move was up, then the flag would slope down. If the move was down, then the flag would slope up. Because flags are usually too short in duration to actually have reaction highs and lows, the price action just needs to be contained within two parallel trend lines.
For a bullish flag or pennant, a break above resistance signals that the previous advance has resumed. The length of the flagpole can be applied to the resistance break or support break of the flag/pennant to estimate the advance or decline.

The "flagpole" for this flag measures 46.

Our Silver chart above speaks for itself.

Monday, November 5, 2007

So Simple, A Caveman Could Do It

Clive Maund had a great post this weekend on Silverseek:

As you can see from his chart above, being long Silver here and now is an obvious nobrainer. As I have referenced countless times, today's chart is almost identical to the chart in the Fall of 2005. We may be on the cusp of seeing history repeat itself in Silver. From November of 2005 to May of 2006 Silver nearly doubled. Do the math...$28 Silver by Spring 2008? Ooooooo Momma!

But that's getting a bit too far ahead of ourselves. The chickens haven't hatched yet. Silver took a crack at the February 2007 "intra-day" high of 14.73 overnight in Asia and got repelled. Not surprising, but none to worry. Silver closed above 14.31 Friday, and awaits word from Mission Control for trans-lunar-injection. The Moon is up there. Silver support at 14.31 and looks like it may be firm at 14.20.

Gold busted some nuts on the COMEX Friday. Watching spot Gold clear 800 Friday was thrilling. Those expecting Gold to waffle and retreat here at the Big Round Number may be in for a very rude awakening. A major short squeeze is about to explode. Two more closes above 800 and Gold may rise straight up thru the month of November. Support in Gold at 795 and looks firm at 787. We may never see Gold below 775 again.

And for some truly scary reading, and good reason to be long Gold and Silver, we turn to our favorite flogger of the Fed and US Treasury, Bob Chapman, The International Forecaster. You owe it to yourself to read his latest essay.

Here we are four months into a credit crisis and it is only 5% resolved. We believe this crisis has a long way to go as the interbank system attempts to restore confidence and trust. The traditional buyers of short-term corporate debt, better known as commercial paper, are still on strike and there is no end in sight.

Over the past month the attention in the media has been focused on structured investment vehicles, SIVs, which have no visible market and hence no value. By our calculations the major New York banks are holding more than $400 billion of this toxic garbage.

As you know our Secretary of the Treasury Mr. Paulson, formally of Goldman Sachs, who we cannot decide whether he is still in Wall Street or doing what he should be for the American people, has been used as the front man to rescue his colleagues, the bankers and investment bankers. Though we are told no government money will be used, this past week Mr. Paulson floated a proposal to reward lenders for not raising interest rates on resetting loans and to reward homeowners who should never had loans in the first place. The banks and the deadbeats get bailed out and the American taxpayer again is allowed to foot the bill.

Friday, November 2, 2007

What If "The Fed Said", And Nobody Listened?

Has Wall Street finally awoken to the smell of burning toast? Have we reached the beginning of the end, or the end of the beginning, of the destruction of the US Economy? Or has it already been destroyed, and it's being kept a secret?

The Fed dutifully doles out it's candy [rate cut] on Halloween and the party on Wall Street continues. But wait, that fortune on the Bazooka Joe Comic is not very promising. The Fed says they may be out of candy, and besides, they think you've had enough: "The risks of Inflation and the risks of Recession are in balance, our job is finished." The party is over...

So the Fed coughs up a 25 point hairball on Halloween and then "injects" $41 BILLION dollars into the banking system Thursday to soothe resilient credit jitters. LOL! The Fed pumped those BILLIONS into the banking system because investors quickly saw through the fallacy of Wednesday's GDP report and saw the Economy's future written in blood on the wall.

Yesterday (October 31st), as the dollar fell to new record lows and oil and gold prices surged to new highs, Wall Street remained fixated on wholly meaningless government data that managed to report the lowest inflation in the last half century. These bizarre numbers were integral in allowing the Commerce Department to report 3.9% annualized GDP growth in the third quarter, which was heralded by the bulls as evidence that a resilient U.S. economy had shrugged off the problems in the housing and mortgage markets. However, the government’s ability to make “economic growth” magically appear is based purely on statistical finesse.

To arrive at this rate, the government had to assume that inflation during the quarter ran at an annualized rate of .8% (that’s less than 1%). That is the lowest rate of inflation used to calculate U.S. GDP since the Eisenhower administration. With oil priced at almost $100 per barrel, gold futures trading over $800 per ounce, the dollar hitting record lows, and the Fed printing money like it is going out of style, the government has the nerve to claim that current inflation is the lowest it has been in half a century. Unbelievable!

Just in case there is some confusion, the government adjusts nominal GDP gains using the GDP deflator, which represents the inflation rate during the time period being measured. This is done to strip inflation out of the GDP calculation so that only real growth gets counted: not nominal gains that result purely from inflation.

The consensus estimate for 3rd quarter GDP growth was 3.4%. The reason we beat that number was that the government adjusted the nominal 4.7% gain by a mere .8%. Had the government assumed a higher rate of inflation, say 2.6% (identical to the rate used to deflate second quarter GDP,) the 3rd quarter gain would have been only 2.1%, well shy of the consensus forecast. My guess is that inflation is actually running at an annualized rate closer to 10%. Therefore using a more honest deflator, the U.S. economy is actually contracting, which would explain the recent anecdotal evidence provided by various economic polls, voter dissatisfaction and consumer sentiment numbers. In fact, if one simply measures U.S. GDP using gold or any other currency, it is clear that we are already in a recession.

-- Peter Schiff, Euro Pacific Capital, Inc.

Wall Street Plunges on Fears That Interest Rate Cuts Will End Even As Economy Is Weakening
NEW YORK (AP) -- Wall Street plunged Thursday, pulling the Dow Jones industrial average down more than 360 points as investors found themselves confronted by two uncomfortable prospects: an end to interest rate cuts and a slowing economy.

Mindful of a warning from the Federal Reserve Wednesday about inflation, the market nervously watched the price of oil, which passed $96 a barrel overnight for the first time before dipping on profit-taking. The Fed, which cut interest rates a quarter point, said in a statement that inflation remained a concern, and oil's ascent to another record raised the possibility not only that the Fed might stop cutting rates, but that it might even consider raising them if inflation accelerates.

Meanwhile, Wall Street also had to contend with concerns about a slowing economy. A report from the Commerce Department indicated consumers scaled back their spending in September as worries mounted about a worsening housing market and further credit market turmoil. And a trade group reported that manufacturing in the U.S. grew in October at the weakest pace since March.

The combination of factors led investors to pull back sharply from Wednesday's rally, in which the Dow climbed 137 points after the Fed said the economy had weathered the summer's credit crisis.

With the market growing pessimistic about the economy, the Labor Department's report on October jobs creation, scheduled to be released Friday morning, will be taking on even more importance than it usually has. The data is expected to show unemployment remained steady in October, with payroll growth of 85,000 new jobs, compared with 110,000 in September.

LOOOOOOOOOL! "The Fed said." The great and all powerful Oz has spoken. Give me a break. Go on believing the Fed and when you wake up, it won't be in Oz baby. The Fed, The US Treasury Dept., The White House, CNBC, The Labor Dept. ...you name it, they all lie like cheap rugs in a trailer park. Don't believe ANYTHING the clowns spew. Buy Gold, Buy Silver, and start stocking up on canned goods and ammunition.

Gold and Silver both remained resolute in the face of yesterday's Whoosh on Wall Street. The carnage carried over to Asia overnight, and Gold and Silver held tough over there as well. Quite the opposite reaction as to what we saw back in August as the credit crisis began to erupt around the globe. The speculators in Gold and Silver fueled by the Yen carry trade may have finally been driven from the Precious Metals markets. Buyers the past 7 weeks are, have been, and will continue to be "investors" looking to buy "wealth insurance" to protect the value of their money...no matter the currency. It is doubtful we will see a "whoosh" in the metals anytime soon. Buy the dips from here until the first week of December. $800+ Gold and $16 Silver are closer than you might think.

Gold has defended support around 785 admirably. Silver briefly lost 14 yesterday morning, but for all intents and purposes defended support around 14.10/15 with vigor. All the shorts "under" these markets actually may put a floor under them. As each day passes these shorts become more anxious about there losses and are looking to cover at any opportunity to "duck and cover". Nothing that has occurred this week changes ANYTHING with regards to where the Precious Metals are headed. The Moon is still up there, and that's where we are headed.