lost hopeI may have lost hope for MDN but still believe gold is the only financial salvation.
Beware the difference: Things changed for gold Friday 21st. 2008
$800US & $1017 CDN, nice for those that bought gold in CDN$ a few months ago.
Gold ended the week up $57 and pushed the TSX up in the final hour. TSX being a commodity/resource heavily based exchange, this makes sense. However, the bounce in NY and the DOW specifically, was so engineered it was silly. The word by the political and financial powers was, “Do not let this week finish below 8000”. The question I have been asking myself since the $700B bailout is how much of this money were they told to sideline to support the DOW and see to it that gold didn’t get to heady. This should be very scary to most investors in the DOW because it speaks reams about where that market is headed. “6500 any one”, nothing has changed! US debt is still massive and growing and the stocks listed in NY exchanges remain extremely vulnerable to corporate mismanagement and the derivative time bomb that hasn’t gone off yet. Big 3 in trouble and even with bailout layoffs will be massive. CITI is in trouble and smaller banks are on the edge. The driver of the US economy, The Consumer, is broke and/or unemployed, unemployment is getting worse and those that thought they had pensions are in for a rude awakening that may not be totally realized until early in the new year. It is my guess that many pensions are already wiped out and the people that had been living on them will be competing for minimum wage jobs, dressed in some tacky uniform and swallowing their dignity daily.
Engineered bounces like Friday are deadly for the average investor. This simply draws more of their money into a market that has very little upside potential for the next 18-24 months, and that may be optimistic time line. What was even more ridiculous about this bounce was that head lines suggesting that the appointment to the Secretary Treasury of one man could fix the economy. The damage the Bush administration has done in the past 8 years is not going to be fixed in two years and likely not even in 8. The huge bail outs and constant infusions of new money are only slowing the inevitable while at the same time making the final outcome more painful for the average person. When a market is reduced to looking for fluff like these appointments to try and cover their manipulative involvement, it is in bigger trouble that we thought. I am sure this stupidity is not going unnoticed by investors around the world. I appreciate that preventing a society from panic is part of government duty, but to do things that can potentially American’s savings (mutual funds-pensions) and transfer those dollars to companies and the elite is morally and legally wrong. I would hope for more honesty from the Obama administration, anything less would maintain the status of the Bush corruption.
What is important about Friday is that it may be a window showing us the divergence between gold/silver and the paper markets. Manipulation of the metals by paper pushers and the suppliers of fiat is no secret to those of us that have been in metals for ages but it may become news to those in funds that are heavily loaded with financials and industrials. So many people I know are being conned by their bank or investment firm into holding on to funds that are down 20-60% with the assurance they will recover. The problem I see here is that many of these people are 55+ and do not have the time to hang on to these things for 7-10 years. Some of these funds will be bankrupt by then and others will have lost 75% or more, and yes a handful will recover. Better to take what you have left and get it into a market with safe haven or upside potential. Precious metals, energy or green/energy technology, and further ahead, the Japanese car manufacturers. Over the short term (next 18 months) PM’s are the place to be and in fact may recover your losses in the financials and funds over the past 2 years. One problem that I see for so many is that they are NOT in charge, or even cognoscente of what is going on with their money and rely heavily on banks and investment firms. These brokers and investment firms have a vested interest in their personal and corporate well being with little regard for the clients future. To be fare to some of these brokers and bank employees, it is just a job and they know little about the foundation under some of these funds. They are doing what they are told in order to collect a paycheck.
There are a lot of reasons to be in gold and good gold shares right now but there are a couple reasons that stand out.
- Governments cannot deflate their way out of the huge debts they have taken on. They must resort to monetary inflation which is accelerating at an incomprehensible rate. This will result in devaluation of their fiat and result in massive inflation and hyperinflation. Relative price of gold remains goes up.
- Physical gold available is becoming difficult to find. As of last week orders were taking 3 weeks and even that depended on what you wanted.
- Silver is no longer even available and traditional exchanges selling silver will not even take orders.
- Iran, Saudi and others are letting the rumor be heard that they are thinking about divesting some of their foreign exchange into gold. This will happen and if the Chinese 4000 tons turns out to be more than rumor look out above. Gold at $3000 an ounce will become a reality rather than pipe dream. These countries all know it is only a matter of time before the US$ tanks but are all reluctant to be the first to cause its final demise. Human nature being what it is, this will happen and none want to be the holder of useless paper that they have spend decades collecting. Even the crooks don’t want to be stuck with dollars anymore. It is also important to keep in mind its not just US paper that is trash, all currency around the world suffers from the same politically contracted disease –re-election influenza. When it comes to printing they are like the first time embezzler, they will right the situation as soon as they get through this crisis. I have no doubt that government around the world will print fiat at such a rate over the next 18 months that gold will see $3000/oz before sanity returns.
Gold in US$ right now is a steal, gold in CDN$ is still a buy, gold stocks are a no brainer. What we saw on Friday for ABX, G, K, is only a small sample of what we can expect when gold hits $1000 and starts to move to where it should be. This week there will be a concerted effort to scare the crap out of gold investors and convince them that all is well and the DOW is headed for 14,000 again. If gold price dips I for one will be buying. It should be another exciting and telling week.
Got Gold.
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