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.


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