Tuesday, January 4, 2011

Inflation To Be Precious Metals Best Friend In 2011

Happy New Year! With the constant buzz of the holidays as experienced from within the retail food industry now behind me, I can now look forward to focusing my free time on the Precious Metals again.

A noted observation from the just finished year: Inflation IS out there. Food prices are rising rapidly and substantially. The food retailer I work for passed through a number of outrageous food price increases over the holidays when shoppers are "less price conscious". Beware of a dastardly promotional trick unsavory retailers will use to dupe their customers:

The retailer will raise the "retail price" of an item and then put it on special at the original retail price, thus fooling the customer into believing the item is on sale when it really isn't. This imo is the most disgusting marketing ploy retailers use. In effect it is a lie used to take advantage of the customer in an effort to pad the retailers markup on goods. It is the height of "deceptive advertising". If you catch your retailer in this "game", call them on it and demand honesty. Food retailers will screw you at every opportunity if you let them.

As 2010 becomes the year that was, we take prideful note of the gains in the Precious Metals over the past 12 months. Silver finished the year up a remarkable 84%. Gold ended 2010 up a very respectable 30%. Palladium was the stealth performer, up a stunning 95%. Platinum closed out 2010 up 87%.

No doubt the financial news media and the talking heads of high finance are dismissing these gains and have opened the new year 2011 with warnings about high prices and bubbles in the Precious Metals. I have only one thing to say to these financial news media knuckleheads,

"You ain't seen nothing yet fools."

The Precious Metals are far from being in a bubble. The average investor has ZERO exposure to any of them. Presently, the Precious Metals are being accumulated by the "smart money" in the investment community. Naysayers claims that gains in the Precious Metals last year were from hedge funds -chasing yields and extracting them from historically unorthodox places is pure ignorance of the TRUTH.

The Precious Metals are rising in price because the World's fiat currencies are being debased rapidly as entire nations teeter on the verge of sovereign debt default. It is near impossible to pin the bulk of last years gains in the Precious Metals to the actions of a few large hedge funds chasing yields. This sort of explanation could only come from the pens and mouths of folks like Kitco's ignoramus Jon Nadler or newsletter writer, and always wrong Gold trader, Dennis Gartman. 2010 was a year of missed opportunity if you listen to the likes of these morons.

Who said the dumbest things about precious metals in 2010?
By Adrian Douglas
As 2010 winds down it is time to announce the runners-up and the winner of the coveted “Moron of the Year” (MOTY) Award.

The award is now in its fifth year. Although the MOTY provides some light entertainment it does also have a more serious intention. It serves to take to task, in a small way, those journalists and public officials who feel they can misinform or lie to the general public and investors alike with total impunity. People who are paid to give information to others have a duty to check what they say is accurate to the best of their ability. But the truth has become largely irrelevant to many of these people; it is an inconvenience that must be “spun” out of the way. I hope that those who are nominated might feel embarrassed enough to pay more attention to what they say and publish.

For those who are new to the MOTY Award tradition here are the previous winners:

2006 *Simon Constable, TheStreet.com
2007 *Jon Nadler, Senior Analyst of Kitco
2008 Dennis Gartman, Editor of the Gartman Letter
2009 Philip Klapwijk, GFMS Executive Chairman

* An asterisk denotes having been inducted into the Moron All Time Hall of Fame. A winner of the annual MOTY can win the award because of a momentary mental lapse that results in a totally moronic utterance; however, there are serial offenders who are genetically disposed to make moronic statements; with such individuals there is a high likelihood of them spewing moronic drivel every time they move their lips. No amount of public embarrassment from winning a MOTY can deter them from reoffending. Such individuals have a very good chance to be inducted into the MOTY Hall of Fame.

As in previous years the competition was fierce for who uttered the most moronic drivel with respect to precious metals or financial markets. Coming in at number 10….

The Precious Metals opened trading in the New Year with a bang overseas only to once again be met by the usual "paper" stonewall at the CRIMEX in New York. "Not so fast," say the crooks in New York. Good freakin' luck to them. They are doomed once again to failure in their efforts to halt the rise in price of the Precious Metals.

Taking a look at the seasonal charts in Gold and Silver as we enter the new year, it is not unusual for Gold to stumble in the first week of January, and then rise thru the rest of the month. Silver usually springs from the gate in early January and runs higher through the entire month. Both metals tend to rollover with the onset of the Chinese New Year in early February, and the second month of the year tends to be disappointing for Precious Metals bulls. Volatility reigns supreme in the Precious Metals thru march and April, with an upward bias. The month of May is most likely the period where Precious Metals traders want to stay away or be short the markets. May often signals an intermediate top in the Precious Metals that often results in a correction in prices into July. Bottom fishers in the Precious Metals in July are often rewarded with impressive gains as the metals tend to rise for the balance of the year from August thru December.

Please remember that the seasonal charts are representative of the market "averages" and are no guarantee of future performance. I do however expect with some confidence that the Precious Metals will rise in 2011 as strongly or stronger than they did in 2010...particularly Silver and Palladium.

Silver's Artificial Price Fixing Regime Has Ended
By Peter Cooper
Reliable market estimates suggest that there around two billion ounces of gold held above ground in bullion, and only one billion ounces of silver.

Over time there has been far more silver mined than gold, around 45 billion ounces, but it has almost all been consumed by industry. Much more of the five million ounces of gold mined by mankind remains.


At current prices then the total silver market is worth $30.6 billion and gold $2.8 trillion. Any investor ought to spot the undervaluation there. That is what happens when a commodity trades at a lower price than three decades ago.

It is as though silver has been kept in some kind of communist, controlled economy. And indeed, that essentially is what happened after the 1980 silver price crash. Several banks colluded to keep the silver price locked down and in a world of its own, trading silver to profit their own books.

Earlier this year the bank’s position finally became untenable. Regulators began to publicly acknowledge a legion of complaints from investors and found them impossible to deny any longer. And the banks, fearing action largely liquidated their short positions over the quiet summer months.

Price fundamentals change

Silver prices have jumped from $17 to $30 since then. However, while this kind of price spike is always vulnerable to sudden corrections, there is a change in price fundamentals here.

The real lesson is that the artificial price fixing regime is over. Communism has collapsed and price controls are off. The logic is actually for very much higher market prices, not a retracement as some now expect.


Palladium: Best Performer of 2010, Hits Nine-Year High
By Connie Madon
Looking back can be painful, especially if you missed the biggest bull move of the year. The star performer was palladium, which is used in catalytic converters. The metal rallied 95% during 2010, according to the Financial Times.

One major reason for the jump was the belief that Russia has exhausted its stockpiles of palladium that they had accumulated during the Cold War. The big metals trader, Johnson Matthey, said that palladium could swing into a "serious deficit" if sales from the Russian government diminish.

On the futures market, March palladium touched $800 per ounce. Some analysts are forecasting $1,000 per ounce in 2011.

To be certain, the effects of inflation are going to move front and center globally in 2011. This will be the catalyst for much, much higher prices in the Precious Metals...despite what the naysayers are spewing from their lips here at the beginning of the new year. In the bull run in Precious Metals to date, very little of the rise in price can be attributed to "inflationary pressures" as these pressures have been skillfully hidden from the public by the government spin doctors. Come July of this year, the word "inflation" will be coming to every body's lips. An undercurrent of outrage will be gurgling from coast to coast and around the globe as government fears of "deflation" will be steamrolled by a surging rise in the price of everything, and in particular the cost of the two things the US Government says we don't need to measure...Food and Energy.

German Inflation Unexpectedly Quickens as Prices Jump Most in Eight Years

Venezuela Devalues Bolivar For Imported `Essential Goods,' Unifying Rates

Protests intensify in Bolivia over gasoline prices

India Holds Emergency Meeting To Deal With Price Inflation

Prices Soar on South America Drought

European Inflation Accelerates More Than Forecast

South Korean president calls for war on inflation

Australia's worst floods in about 50 years hit commodity exports

Hang on to your hats, we ain't seen nothing yet. Ben Bernanke is a bumbling idiot. 2011 could get very ugly for those outside of the Precious Metals looking in. If you are in Precious Metals, sit tight...and be right.

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