Monday, March 31, 2008

Good Silver Price Action

There was good silver price action today in the futures market.

Last Tuesday, silver gapped up in price from Monday. Usually this gap would be closed (prices would come back down to the bottom of the gap). That gap got closed today on this futures chart.

Much, much, much higher USD silver and gold prices will be brought to you courtesy of the Federal Reserve's banana republic rate of dollar creation.

Fancy digs for what is similar to a counterfeiting operation. And, unlike basic 'ol counterfeiters, the Fed gets a steady stream of interest payments from the US Treasury for the few minutes of work they do dancing fingers on a key board creating digital bits on a hard drive. Nice work if you can get it.

Despite the silver price going down today, it's good, normal, healthy price action. The gap got closed. It can go a tad lower even and still be good silver price action. Silver can now go to work going back up to make new highs.

"What? Me worry?" - Alfred E. Newman

Friday, March 28, 2008

Greenspan Knows Gold

Alan Greenspan's essay, "Gold and Economic Freedom," was published in Ayn Rand's "Objectivist" newsletter in 1966, and reprinted in her book, Capitalism: The Unknown Ideal, in 1967.

Gold and Economic Freedom

An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions. They seem to sense - perhaps more clearly and subtly than many consistent defenders of laissez-faire - that gold and economic freedom are inseparable, that the gold standard is an instrument of laissez-faire and that each implies and requires the other.

In order to understand the source of their antagonism, it is necessary first to understand the specific role of gold in a free society.

Money is the common denominator of all economic transactions. It is that commodity which serves as a medium of exchange, is universally acceptable to all participants in an exchange economy as payment for their goods or services, and can, therefore, be used as a standard of market value and as a store of value, i.e., as a means of saving.

The existence of such a commodity is a precondition of a division of labor economy. If men did not have some commodity of objective value which was generally acceptable as money, they would have to resort to primitive barter or be forced to live on self-sufficient farms and forgo the inestimable advantages of specialization. If men had no means to store value, i.e., to save, neither long-range planning nor exchange would be possible.

What medium of exchange will be acceptable to all participants in an economy is not determined arbitrarily. First, the medium of exchange should be durable. In a primitive society of meager wealth, wheat might be sufficiently durable to serve as a medium, since all exchanges would occur only during and immediately after the harvest, leaving no value-surplus to store. But where store-of-value considerations are important, as they are in richer, more civilized societies, the medium of exchange must be a durable commodity, usually a metal. A metal is generally chosen because it is homogeneous and divisible: every unit is the same as every other and it can be blended or formed in any quantity. Precious jewels, for example, are neither homogeneous nor divisible. More important, the commodity chosen as a medium must be a luxury. Human desires for luxuries are unlimited and, therefore, luxury goods are always in demand and will always be acceptable. Wheat is a luxury in underfed civilizations, but not in a prosperous society. Cigarettes ordinarily would not serve as money, but they did in post-World War II Europe where they were considered a luxury. The term "luxury good" implies scarcity and high unit value. Having a high unit value, such a good is easily portable; for instance, an ounce of gold is worth a half-ton of pig iron.

In the early stages of a developing money economy, several media of exchange might be used, since a wide variety of commodities would fulfill the foregoing conditions. However, one of the commodities will gradually displace all others, by being more widely acceptable. Preferences on what to hold as a store of value, will shift to the most widely acceptable commodity, which, in turn, will make it still more acceptable. The shift is progressive until that commodity becomes the sole medium of exchange. The use of a single medium is highly advantageous for the same reasons that a money economy is superior to a barter economy: it makes exchanges possible on an incalculably wider scale.

Whether the single medium is gold, silver, seashells, cattle, or tobacco is optional, depending on the context and development of a given economy. In fact, all have been employed, at various times, as media of exchange. Even in the present century, two major commodities, gold and silver, have been used as international media of exchange, with gold becoming the predominant one. Gold, having both artistic and functional uses and being relatively scarce, has significant advantages over all other media of exchange. Since the beginning of World War I, it has been virtually the sole international standard of exchange. If all goods and services were to be paid for in gold, large payments would be difficult to execute and this would tend to limit the extent of a society's divisions of labor and specialization. Thus a logical extension of the creation of a medium of exchange is the development of a banking system and credit instruments (bank notes and deposits) which act as a substitute for, but are convertible into, gold.

A free banking system based on gold is able to extend credit and thus to create bank notes (currency) and deposits, according to the production requirements of the economy. Individual owners of gold are induced, by payments of interest, to deposit their gold in a bank (against which they can draw checks). But since it is rarely the case that all depositors want to withdraw all their gold at the same time, the banker need keep only a fraction of his total deposits in gold as reserves. This enables the banker to loan out more than the amount of his gold deposits (which means that he holds claims to gold rather than gold as security of his deposits). But the amount of loans which he can afford to make is not arbitrary: he has to gauge it in relation to his reserves and to the status of his investments.

When banks loan money to finance productive and profitable endeavors, the loans are paid off rapidly and bank credit continues to be generally available. But when the business ventures financed by bank credit are less profitable and slow to pay off, bankers soon find that their loans outstanding are excessive relative to their gold reserves, and they begin to curtail new lending, usually by charging higher interest rates. This tends to restrict the financing of new ventures and requires the existing borrowers to improve their profitability before they can obtain credit for further expansion. Thus, under the gold standard, a free banking system stands as the protector of an economy's stability and balanced growth. When gold is accepted as the medium of exchange by most or all nations, an unhampered free international gold standard serves to foster a world-wide division of labor and the broadest international trade. Even though the units of exchange (the dollar, the pound, the franc, etc.) differ from country to country, when all are defined in terms of gold the economies of the different countries act as one-so long as there are no restraints on trade or on the movement of capital. Credit, interest rates, and prices tend to follow similar patterns in all countries. For example, if banks in one country extend credit too liberally, interest rates in that country will tend to fall, inducing depositors to shift their gold to higher-interest paying banks in other countries. This will immediately cause a shortage of bank reserves in the "easy money" country, inducing tighter credit standards and a return to competitively higher interest rates again.

A fully free banking system and fully consistent gold standard have not as yet been achieved. But prior to World War I, the banking system in the United States (and in most of the world) was based on gold and even though governments intervened occasionally, banking was more free than controlled. Periodically, as a result of overly rapid credit expansion, banks became loaned up to the limit of their gold reserves, interest rates rose sharply, new credit was cut off, and the economy went into a sharp, but short-lived recession. (Compared with the depressions of 1920 and 1932, the pre-World War I business declines were mild indeed.) It was limited gold reserves that stopped the unbalanced expansions of business activity, before they could develop into the post-World Was I type of disaster. The readjustment periods were short and the economies quickly reestablished a sound basis to resume expansion.

But the process of cure was misdiagnosed as the disease: if shortage of bank reserves was causing a business decline-argued economic interventionists-why not find a way of supplying increased reserves to the banks so they never need be short! If banks can continue to loan money indefinitely-it was claimed-there need never be any slumps in business. And so the Federal Reserve System was organized in 1913. It consisted of twelve regional Federal Reserve banks nominally owned by private bankers, but in fact government sponsored, controlled, and supported. Credit extended by these banks is in practice (though not legally) backed by the taxing power of the federal government. Technically, we remained on the gold standard; individuals were still free to own gold, and gold continued to be used as bank reserves. But now, in addition to gold, credit extended by the Federal Reserve banks ("paper reserves") could serve as legal tender to pay depositors.

When business in the United States underwent a mild contraction in 1927, the Federal Reserve created more paper reserves in the hope of forestalling any possible bank reserve shortage. More disastrous, however, was the Federal Reserve's attempt to assist Great Britain who had been losing gold to us because the Bank of England refused to allow interest rates to rise when market forces dictated (it was politically unpalatable). The reasoning of the authorities involved was as follows: if the Federal Reserve pumped excessive paper reserves into American banks, interest rates in the United States would fall to a level comparable with those in Great Britain; this would act to stop Britain's gold loss and avoid the political embarrassment of having to raise interest rates. The "Fed" succeeded; it stopped the gold loss, but it nearly destroyed the economies of the world, in the process. The excess credit which the Fed pumped into the economy spilled over into the stock market-triggering a fantastic speculative boom. Belatedly, Federal Reserve officials attempted to sop up the excess reserves and finally succeeded in braking the boom. But it was too late: by 1929 the speculative imbalances had become so overwhelming that the attempt precipitated a sharp retrenching and a consequent demoralizing of business confidence. As a result, the American economy collapsed. Great Britain fared even worse, and rather than absorb the full consequences of her previous folly, she abandoned the gold standard completely in 1931, tearing asunder what remained of the fabric of confidence and inducing a world-wide series of bank failures. The world economies plunged into the Great Depression of the 1930's.

With a logic reminiscent of a generation earlier, statists argued that the gold standard was largely to blame for the credit debacle which led to the Great Depression. If the gold standard had not existed, they argued, Britain's abandonment of gold payments in 1931 would not have caused the failure of banks all over the world. (The irony was that since 1913, we had been, not on a gold standard, but on what may be termed "a mixed gold standard"; yet it is gold that took the blame.) But the opposition to the gold standard in any form-from a growing number of welfare-state advocates-was prompted by a much subtler insight: the realization that the gold standard is incompatible with chronic deficit spending (the hallmark of the welfare state). Stripped of its academic jargon, the welfare state is nothing more than a mechanism by which governments confiscate the wealth of the productive members of a society to support a wide variety of welfare schemes. A substantial part of the confiscation is effected by taxation. But the welfare statists were quick to recognize that if they wished to retain political power, the amount of taxation had to be limited and they had to resort to programs of massive deficit spending, i.e., they had to borrow money, by issuing government bonds, to finance welfare expenditures on a large scale.

Under a gold standard, the amount of credit that an economy can support is determined by the economy's tangible assets, since every credit instrument is ultimately a claim on some tangible asset. But government bonds are not backed by tangible wealth, only by the government's promise to pay out of future tax revenues, and cannot easily be absorbed by the financial markets. A large volume of new government bonds can be sold to the public only at progressively higher interest rates. Thus, government deficit spending under a gold standard is severely limited. The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit. They have created paper reserves in the form of government bonds which-through a complex series of steps-the banks accept in place of tangible assets and treat as if they were an actual deposit, i.e., as the equivalent of what was formerly a deposit of gold. The holder of a government bond or of a bank deposit created by paper reserves believes that he has a valid claim on a real asset. But the fact is that there are now more claims outstanding than real assets. The law of supply and demand is not to be conned. As the supply of money (of claims) increases relative to the supply of tangible assets in the economy, prices must eventually rise. Thus the earnings saved by the productive members of the society lose value in terms of goods. When the economy's books are finally balanced, one finds that this loss in value represents the goods purchased by the government for welfare or other purposes with the money proceeds of the government bonds financed by bank credit expansion.

In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.

This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard.


Think it is safe to say that Greenspan "gets" gold, knows gold?

Tuesday, March 25, 2008

Silver Price Bottom

It looks like the silver price has bottomed right around here:

Silver put in a double top. The first top in the first week of March. The second top in the second week of March. Then, silver went down 4 days in a row, gapping down on the last day. It is now into a good support level around 17. The odds are really good that silver's move to the down side is basically over.

Remarks by Governor Ben S. Bernanke
Before the National Economists Club, Washington, D.C.
November 21, 2002

"The conclusion that deflation is always reversible under a fiat money system follows from basic economic reasoning. A little parable may prove useful: Today an ounce of gold sells for $300, more or less. [er... closer to $1,000] Now suppose that a modern alchemist solves his subject's oldest problem by finding a way to produce unlimited amounts of new gold at essentially no cost. Moreover, his invention is widely publicized and scientifically verified, and he announces his intention to begin massive production of gold within days. What would happen to the price of gold? Presumably, the potentially unlimited supply of cheap gold would cause the market price of gold to plummet. Indeed, if the market for gold is to any degree efficient, the price of gold would collapse immediately after the announcement of the invention, before the alchemist had produced and marketed a single ounce of yellow metal.

What has this got to do with monetary policy? Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation."

For some fun:

"Meeting of the

Exchange Stabilization Fund

September 2, 2006

[Unauthorized, Unredacted and Apocryphal]


The more there is of something, the less it is worth. So, naturally, someone will want more USD for the same weight of silver (gold, loaf of bread, gallon of milk, or any other thing of intrinsic value). Holding silver and gold is a no brainer; with the Fed working with "money" pumps like these, no need to worry about the USD price of silver. It's going right back up. It looks like the bottom is right around this level.
"What? Me worry?" - Alfred E. Newman

Monday, March 24, 2008

Another Reason for Higher Gold and Silver Prices - Part 3

Another reason for higher gold and silver prices is that The Fed and Bernanke are "just throwing the dollar out the window".

Jim Rogers started the Quantum Fund with George Soros. It is famous for average annual returns of 30+% over 25/30 years. Jim is outraged over what The Fed is doing:

"I think the Fed should be abolished ... this one [the States have had two others] will go out of business, too. ... He's [Bernanke] letting the dollar collapse. He's given up on the dollar."

"I find it outrageous that the Federal Reserve is just throwing the dollar out the window." ... [using the federal government's current CPI formula which is big time rigged to the down side] ... "gold should be over $2,000." ... [speaking of the Fed's bailout of Bear Sterns] ... "That's not capitalism. That's socialism for the rich." ... [on central banks] ... The first two central banks in America failed. ... Greenspan and Bernanke ... They're setting up the failure of the central bank. The demise of the Federal Reserve. The first two failed. This one's gonna fail, too.

Another interview with Jim Rogers:

Andrew Jackson and the Bank War

The best published account of the "bank war" between Andrew Jackson and Nicolas Biddle is Robert Remini’s Andrew Jackson and the Bank War. Jackson considered fiat money to be "the instrument of the swindler and the cheat. For Andrew Jackson, hard money – specie – was the only legitimate money; anything else was a fraud to steal from honest men." (Remini, p. 19). Jackson also believed that the doctrine of states’ rights meant that a central bank was unconstitutional. This view was quite pervasive, especially in the South. As Timberlake writes (p. 83): "The states . . . . were properly jealous and fearful of encroachment by the federal government. Since a central bank would necessarily be a federal bank and would maintain and operate state branches from a distant center, proponents of states’ rights found opposition to a national bank almost mandatory."

Jackson suspected that a central bank would be controlled by Northern bankers and would be used to manipulate politics. Remini does point out that the strongest support for the bank came from New England, whereas the fiercest opposition came from Southern politicians like Jackson.

Jackson had good reason to fear political manipulation by a central bank. The first president of the Bank of the United States (BUS) was Navy Captain William Jones, who had no banking experience and who had just gone personally bankrupt. Murray Rothbard blames him for the Panic of 1819 in his book of the same title, which is cited by Remini."
President Jackson fights the U.S. Bank . . . and wins!!


"The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists." - Ernest Hemingway

"One of the objectives they had for the creation of the Federal Reserve System was to create a structure which would have a hand in the public purse, so that when the banks got into trouble they would be able to draw upon tax payers' support to bail them out, and they would do so under the banner of protecting the public. It's a very clever ploy." … G. Edward Griffin

"The Federal Reserve System virtually controls the nation's monetary system, yet it is accountable to no one. It has no budget; it is subject to no audit; and no Congressional Committee knows of, or can truly supervise, its operations." … Murray N. Rothbard

"The central bank is an institution of the most deadly hostility existing against the principles and form of our Constitution." … Thomas Jefferson

"How fortunate for governments that people do not think." … Adolf Hitler

"If a politician found he had cannibals among his constituents, he would promise them missionaries for dinner." --- H. L. Mencken

"The suppression of truth has long been among the highest priorities for the upper echelons of power and authority. For a minority elite that clings to power by the manipulation of the masses using an omnipresent cocktail of lies, deception, mass-produced ignorance and ingrained propaganda, the destruction of truth is an essential method of control. It is a formula that has worked to unmitigated success for the elite throughout history, whether the shadows of power stretch from ancient pyramids, marble temples, castles, mansions or halls of governance. Those holding the levers of power and control understand, better than most, that the dissemination of truths to a blind majority could spell the end of their reign, for truth brings sight to the blind." … Manuel Valenzuela


The Fed has got the "pedal to the metal", M3 growing at about an annualized 18 freekin percent, but hasn't finished shifting through the gears let alone hit overdrive:

"Gold still represents the ultimate form of payment in the world....(May, 1999)" - Alan Greenspan. [Alan knows the game. He used to hang out with Ayn Rand's crowd (author of Atlas Shrugged). He just turned bad boy and went over to the dark side.]

Gold and silver prices are going up. Way way way up, much higher, in their US$ prices. As Marc Farber said, "Mr. Bernanke is the gold buyer's best friend. ... My biggest position is basically gold."

Sunday, March 16, 2008

Another Reason for Higher Gold and Silver Prices - Part 2

The Fed's Z-1- or "flow of funds" - report (plus stupid government rigged stats) are another reason for higher gold and silver prices, much much much higher.

Total US credit: up a record $US 3.998 trillion (8.9%) from a year ago to $US 48.808 trillion.
US GDP: about $US 13.2 trillion.
US economy debt load: 370% of annual GDP.

$3.998 trillion of $US 13.2 trillion GDP was new credit, not the creation of real economic goods and services.
So the **real** US GDP economy is $9.2 trillion.
So the **real** US GDP economy is carrying a debt load of 530% or $US 48.808 trillion.

To stabilize the US economy, the credit (debt) expansion ($US 3.998) would have to stop cold, which would mean a GDP contraction of 30+%. This will happen at some point as more and more lenders do not want to lend and more and more borrowers do not want to borrow. Either because both do not want to or simply can not. The longer the credit expansion goes on, the more the GDP contraction could be.

Thus the panick going on right now in mostly the western world's banking/financial system, but also to some extent among businesses and workers.

Political systems in control of financial systems will naturally fight such a looming contraction to put it off into the future as long as possible, which will make the final contraction even worse than it potentially is now.

The build up of debt can not climb to infinity when the **rate** of real value creation (production of real economic goods and services), that supports that debt, is holding steady or declining.

Tidbit from Z-1:
US bank credit is up $US 1.270 TRILLION (13.8%) over the fourth quarter of 2007 for a total of $US 9.163 trillion. Over a trillion bucks in just a lousy stink'in quarter!!!!!!! Where's the reality in that? Boy! There are a lot of people that do not know, at this point, what is going on and will pay a terrible price. Some will have their very survival threatened because these games of "Make Believe" that central bankers and other financial entities have been playing and continue to play. Of course a lot of these people have gone out of their way not to know or not to tune in. Ignorance is bliss, for a while, till The Piper says it's time to pay up.


Huh, maybe there's a disconnect in the works:

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Notice that Mexicans do not bother putting a stupid stink'n nominal amount on their government minted 1 ounce Libertads. They know that an ounce of silver is worth what the market says it is worth; not what some political currupted government says it is worth.

Central banks with the help of other financial institutions will try (are right now) to create credit/debt faster than it contracts.

It's getting nutty, unreal out there. The western world's financial system, and a large percentage of those people who live in these legal jurisdictions, has gotten too heavy into playing little children's games of "Make Believe", "Pretend". The end is going to be ugly.

Many people are going to have to relearn what Robinson Crusoe economics is all about.
Or Google "Robinson Crusoe Economics"

Tidbit from Bill Buckler:
"Oh, and by the way, remember all the comparisons made by us and many others that $US 850 Gold in January 1980 equates with a figure of $US 2200-2500 Gold today using official US Government CPI figures? ... Somebody has now calculated the equivalent of January 1980 Gold today - using the formula which the US Government calculated the CPI back in January 1980.

Stripping out all the "alterations" and "fine tuning" which has been done over the past three decades is an eye opening exercise. Using the January 1980 "CPI formula", $US 850 Gold then equates to (just over) $US 6000 Gold now."

Now do you see why the Fed's Z-1- or "flow of funds" - report (plus stupid government rigged stats) are another reason for higher gold and silver prices?

"Gold still represents the ultimate form of payment in the world....(May, 1999)" - Alan Greenspan.

Anything about gold change since 1999, or since 5-6,000 years ago? Gold and silver are not promises to pay. They are payments in full.

Sunday, March 09, 2008

Central Banks

If a bank is having a problem, they can go to the "Discount Window" at The Fed,

(The NY Fed)
a central bank, and get a high priced loan. Other central banks can work similarly. People can see the bank do that. It's not all that private or mostly secret. Not good for the bank's reputation. So, a little while ago, The Fed set up a TAF (Term Auction Facility) which is largely secret, and low priced USDs are available. A bank probably would have to put up "collateral" (in this case, "collateral" is more like a joke or a huge step away from reality) for the "loan". The Fed takes as collateral or maybe out right buys, makes a "buy", various financial instruments from banks that have "assets" that are not performing the way they should, or are simply not performing. The Fed might be buying for a dollar something that is worth a tenth of a dollar. Not much is out in the open about TAFs.

Or, maybe it could be said that The Fed has turned into the pawn broker for financial institutions. Elegant quarters for a pawn broker.

Central bank capital:

Emergency "All hands man the keyboards" air horns.

Right now there is a banking panic going on by bankers, not their clients. That comes later since the public is still mostly clueless as to what is happening; the "systemic margin call" as JP Morgan put it.

It's probably the same over at the US Treasury where the paper fiat stuff gets produced, although their horns probably won't go off till there are bank runs by the public.

New key boards for the '"money" out of thin' air workers with an extra key added.

"Money" pumps.

Larger pumps on order.

The NY Fed's vault:

If gold is good enough for the Fed, it should be good enough for everybody.

A color view of The Fed's vault door:

A future Fed worker who's job is creating the digital bit US dollars to keep up with the increasing supply of imploding US dollar financial instruments 'cause the Fed is taking them off the hands of all kinds of financial institutions just to try to keep the US financial system operating, even if shakey/phony book keeping is required.

It is going to be a scary site to behold watching The Fed try to bail out a huge variety of financial institutions just to keep the system from virtually freezing up. Heck, the federal government is going to give about $200 billion free "money" to taxpayers and non-taxpayers alike they are so scared of a crashing economy and financial system. Yesterday it was a "Goldilocks Economy". Now all of a sudden it's free US dollar time. They call it a "rebate" but it's not. The US government does not have those dollars of taxes paid to give back. They are already spent. That's how fast they spend it. In fact they spend so much and so fast that they have to constantly borrow to meet their/its bills.

The US might end up giving Zimbabwe a run for its "money". So it might be a good thing to practise carrying around some weight. You might need to do that just to buy a loaf of bread.

Gold and silver are today's protection from central banks.

Friday, March 07, 2008

Another Reason For Higher Gold And Silver Prices

Below is a major reason for higher gold, silver and precious metal share prices to go a lot higher.

The parties on Wall Street, High Street and other Streets in the English speaking/western world are over. The usual/regular shares, notes and bonds are heading down as selling of them increases. There has simply been too much build up of fraud and debt in the financial system. The Piper is demanding to be paid now.

The almost 30 year long party in shares of all kinds in the US markets is over. The Dow broke below its long term trend line. An argument could be made that the Dow put in a long term double top with the right hand top being higher which is the final strong shake out of the weak shorts.

The first top in the Dow around 2001 was when commodities, gold and silver ** bottomed ** out, and the USD index ** topped ** out.

The top in the US dollar index, around 2001, with its head and shoulders toppping pattern, can be seen in this chart:

In the middle of 2006, the Dow started forming its head and shoulders topping pattern, having since broken down below the neckline. At the same time, the Dow put in a double top with the right hand top being higher, thus being a final strong shake out of any weak Dow shorts hanging around. Classic "text book" topping action. All the fundamentals back up the chart patterns.

There are going to be ULCC (Ultra Large Crude Carriers) worth of US dollars coming out of the stock and bond markets looking for safe havens.

London Metal Exchange: a new all time high.

These massive amounts of exiting US dollars seeking safe havens are another reason for much higher gold, silver, and precious metal share prices. Those safe havens being those things that bottomed at the same time the Dow put in its first top and the US dollar put in its final top.

Thursday, March 06, 2008

Gold and Silver Outside Reversals Days

The first business day of March, silver puts in a ** 10th ** up day in a row. Then the next day both gold and silver had good down days. Then the next day, **BAM **, outside reversal days to the upside for both gold and silver. Screamingly bullish, in your face to the anti-gold cartel, price action.

Here is how they look on futures charts:

A fun graphic:

Silver moved up about a dollar during the NY hours. At some point, silver will be making moves up of $4-5 per day, making 100% gains in a day for those that bought silver back when it was between $4-5. They will be having several 100% gains in a day at some point out there in the future. The gold and silver outside reversal days are things of beauty. There will be more and they will be bigger.

Wednesday, March 05, 2008

Silver Price Charts

Below are 3 silver price charts as of the end of February.

(Click on charts to enlarge)

A 9 year chart:

Silver made it up and out of the bull market's overall channel. Silver is soooooooooooo cheap, even now, expect surprises on the upside.

A 2 year chart:

This chart just shows silver breaking out of its 2nd triangular flag pattern. You should be able to visualize the flag in this chart, the #2 flag in the 9 year chart above. After a while, you're eye will draw in straight trend lines, too.

A 6 month chart:

Silver put in 9 updays in a row at the end of February. 4+ up days in a row is an end of trend signal. So, many times, this would be one of those signals; end of a significant up trend. Do not count on it this time. There is not much happening to confirm this possible signal. This could very well be just another insignificant high in the continuing higher highs and higher lows of a normal bull market. Particularly since the US dollar is down into new low uncharted territory.

Do not be surprised if this reaction does not last long. Silver has been repressed for waaaaaaaaay to long.

After a 7 year long bull market in atoms, stuff, natural resources, gold and silver, "professional" "money" managers are ** just starting ** to wake up to the fact that maybe the long bull market in shares (that started at the beginning of the '80s) is over, that US dollar denominated financial instruments, especially debt (notes and bonds) are heading down hill; those that do not have anything to do with atoms, stuff, natural resources, gold and silver. Guess what areas/markets they are going to try, in a panicy manner, to switch funds under their control to.

Smooth sailing for the "professional" "money" managers that were going with the flow, are 7 years late, did not know anything about Austrian economics, is over. They are now probably experiencing "fear and loathing" (thank you Hunter S. Thompson) at what they do not understand: Austrian economics, or at what they do understand: Keynesian economics that has let them down because it is false.

Anyways, the silver price charts are looking as bullish as ever, as since about 2001.