Silver and Gold
The US Dollar Index is at an all-time low. And with no fundamental or technical support it is going to go down further. Indeed, the FED has given up on the dollar. That is why it recently cut the prime lending rate a half a point and will probably lower it again in a few months.
Jim Rogers and Clifford Bennett argue that the dollar’s status as the world’s reserve currency is over. If they are right, you had better move your dollar denominated investments somewhere else.
Gold is trading at just under $770. Though this seems high, we are witnessing just the beginning of a bull market. Next year it could be $400 higher. Silver is an even better bargain at under $14.
Buy both, especially silver.
An interesting gold hookup, prices have recently gone down http://www.mrbling.com and http://www.goldteethusa.com
Tim I thought you might find these sites helpful.
Comment by BillyJoeJimBob IV — October 27, 2007 @ 10:23 pm
This is IT, according to Jim Sinclair. Sinclair is a conservative gold trader, who has been correct on gold and the dollar for 49 years. I have been reading him now daily for about four years. He has never written an article like this.
Another financial commentator, Edgar J. Steele, advises us to balance our portfolios with the other white metal, lead.
Big things are at hand. The wise will be prepared.
Comment by MRB — October 29, 2007 @ 10:19 am
Gold is currently trading at $820, silver is creeping up to $16. This is just the end of the beginning. We are heading for a massive US dollar meltdown.
Jim Sinclair gives two of the reasons for this:
“We have two very serious incidents that have no practical solution.
“1. The meltdown of the credit and now credit default derivatives. Some have suggested that the Federal Reserve buy all the failed derivative instruments, which they have been buying last Friday to the tune of 41 billion. They simply cannot buy all by any means. To buy them all the Federal Reserve would have to monetize now more than $20 trillion which would produce a situation akin to the Weimar Republic currency debacle. This is simply not possible. There is no PRACTICAL solution to this problem without causing disruption of a terminal nature.
“2. The situation in Pakistan has no practical solution and is a burning fuse . . . There is not greater disaster geopolitically anywhere.
“Are you taking all this seriously?
“Have you protected yourself and your family?
“This is it!”
Comment by MRB — November 6, 2007 @ 2:03 pm
And again, this man is an excellent source.
Comment by Tim H — November 6, 2007 @ 2:17 pm
Fed makes biggest temporary injection since ‘01
This is the headline from Yahoo News. The big investment banks are sitting on a mountain of credit and default derivatives. Since the housing market is tanking, they have had to write off huge losses.
With the Fed protecting its own by infusing cash and lowering rates, the dollar is going the way of the Deutschmark during the Weimar period.
Gold and silver have come down the past few days. This would be a good time to buy.
Comment by MRB — November 15, 2007 @ 3:49 pm
Watch the market tomorrow. Looking at the blood-bath that foreign equity markets took today, the Dow could plunge 500 to 1000 points. The dollar is also shot. Things are much worse than anyone on TV admits.
Gold and silver will shot up soon. $900 gold is a bargain; you have not seen anything get. Protect yourselves and your families. Do not procrastinate.
Comment by MRB — January 21, 2008 @ 5:49 pm
Too late for me.
Good luck and Godspeed to the rest of you.
Comment by danielj — January 21, 2008 @ 6:54 pm
The plunge protection team worked their magic today, but they are running out of tricks. Watch the Dow carefully tomorrow.
Gold is back up and ready to make a run at $1000. Silver is a better bargain. Forget what the mutual funds salesmen say. Get out of equities now. Use the proceeds to pay off your debt (if you have any) and the rest to buy precious metals.
Things are getting ugly. The Fed’s move has put the nail in the dollar’s coffin. Protect yourselves and your family. We are now in unchartered waters.
Comment by MRB — January 22, 2008 @ 4:56 pm
MRB,
Why if you are expecting weak-dollar, hyper-inflation would you advise to pay off debt?
CAH
Comment by CAH — January 23, 2008 @ 11:45 am
CAH -
1. “Owe no man any thing”
2. When the dollar falls even faster than it is falling now, there will be bank runs. Banks will foreclose on anything and everything they can.
3. I am expecting stagflation not simply hyperinflation. Prices are going up, but not incomes. I expect in the not too distant future, some families will be choosing between necessities and paying the mortgage. And if they are late on the latter . . .
I don’t want to sound like Gary North in 1999, but I feel compelled to issue a warning to the readers of this blog. Things are going to get ugly over the next few years. I don’t know any way to say this without melodrama so here goes: America as we have known it will be gone soon. Be prepared. Remember the four G’s: God, guns, groceries, gold (the order is important).
The good news is that America as we have known it will be gone soon. As Edgar Steele says, “New American, an idea whose time has come.”
Comment by MRB — January 23, 2008 @ 11:10 pm
Gold is brushing up against $950 and silver is making a move towards $19.
Danielj - It is not too late. Metals will continue to rise as the dollar falls.
Comment by MRB — February 26, 2008 @ 5:42 pm
I like the points presented here and I appreciate advices on investment diversification. The dollar has no intrinsic value and neither do other currencies. Yes, it’s all paper money and it has been like that for decades. This is where I agree that buying gold/ silver is sound advice.
However, the timing for this can be questioned. Aren’t you sounding a little bit like Gary North in 1999? Maybe not, but saying that gold is still a bargain at $900 is pushing.
Historically 1 oz of gold bought a man a suit or a small weapon (i.e. a good hand gun). This is not hard evidence for anything, just to show some loose comparisons. At $900 dollars you can buy more than a suite or a hand gun, so this LOOSE comparison COULD indicate that gold is overpriced. Will it go higher in the next couple of months? It’s possible.
My point: just don’t panic and go selling everything off and buy gold at today’s prices. Like any investment, try to understand what you’re getting into. Believe it or not, it is possible to loose a lot of money on gold.
Comment by Roger — March 4, 2008 @ 11:35 am
Roger -
As I write gold is at $988, so, yes, gold at $900 is a bargain. When I wrote this post silver was under $14, now it is over $20. This would have meant well over a 30 percent return in dollar terms in just five months for those who bought back in October.
I am aware that I may sound like North and I realize the danger of this. But I believe we are on the verge of economic ruin. And I believe this so strongly that I’m willing to come off sounding extreme.
Your advice is fine for “normal” times, but we are not in normal times. Don’t panic, but don’t sit around doing nothing. Fire your mutual funds salesmen and buy metals. Those who don’t are going to get even more burned.
Comment by MRB — March 5, 2008 @ 4:14 pm
Mike,
I agree with you that the US economy is weak, our deficit is so huge that I even lack a term to describe its size, our government has blood on it hands, and we’re governed mostly by corrupt, immoral and incompetent politicians. So, I can see why you see doomsday ahead of us. Add to that $105 for a barrel of oil and gold around $1,000 an ounce, this looks a lot like 1999 and Y2K.
However, I look at the other side too: 300 million hard working Americans, probably one of the most ingenious and smart people in the world (despite our public education system). I read an article – I wish I remember where – where 76% of Americans have not taken a vacation in 2007. I don’t know how accurate this is, but Americans are hard working people, as I believe you’d agree as well. Just compare our work schedule with that of Europe, especially France where working overtime can be considered illegal. This is my point # 1.
The second point is the global economy, where over 2 billion Indians and Chinese have a taste, a chance of leaving poverty. We’re affected by that as well and this is another controversial topic, but China still buys US bonds. America is still their biggest market. This is not a final solution, but it buys us time. I’m not saying I advocate that, but it’s just like increasing your credit card spending limit when you’re maxed out. Imminent bankruptcy? Not yet, but all we’re doing is just buying time.
I want to keep this post somewhat short, but my final point is this: if we don’t do anything about our economy, I agree with you that doomsday is ahead of us. What I don’t necessarily agree with you is the timing. Mike, there are still “suckers” out there that continue to buy US bonds. I don’t think the Fed gave up on the dollar either.
By devaluating the dollar our products are more competitive in the world and the short-term benefit is a smaller trade deficit, a boost to US exports, and lower interest rates. The risk (which is what you see), is inflation (or even stagflation) and investors going somewhere else. The flip side is a short drug overdose to the economy, trying to boost it.
My point: we can survive this in the short term. An economy can’t survive on a weak currency, but temporarily it can be helpful. I agree this is like going on performance enhancement drugs for a sprint and no one can live a healthy life style as such. Nevertheless, we’ll be around as we are for a while longer. And while longer can even be 10 to 20 years or more, AS LONG AS we have suckers financing our debt, our economy keeps expanding, the dollar doesn’t collapse, AND the public still believes in those worthless green paper notes in their wallets. I don’t think this is going to change overnight.
Roger
Comment by Roger — March 6, 2008 @ 10:52 am
Roger,
I sincerely hope that you are right. Through this downturn, my continued theological studies and God’s amazing grace, I’ve come to see that I’m in no way prepared for the coming financial catastrophe…and I’m a CFP. I’ve also come to see that I’ve not advised my clients correctly and that I’ve held my secular training over and against biblical wisdom. God forgive me!!!
I do pray we have time to get our houses in order. I for one am forever changed by what I’ve learned during these times.
Comment by CAH — March 6, 2008 @ 3:39 pm
Hmmm… I re-read my post above and it almost sounds as if I’m trying to make a case for the US dollar. That’s not so. The Fed’s will do what it takes to bail out those greedy financial institutions that made trillions of dollars during the housing boom. The Feds don’t care about my money or yours, but the “economy” as a whole (Keynes anyone?) and they’ll print all the money they need. So, just to make it clear: I’m not making a case for the dollar. As a matter of fact, it lost approx. 32% in value between 2002 and 2007.
My point is “buying Gold at $1,000”, as I think it’s historically overpriced. Nevertheless, it still could be a good buy. Another option could be investing in other currencies or even foreign stock markets.
We all need a bit more faith in the Good Ol’ Republican party, they’ll bail us out.
That was a joke…
Roger
Comment by Roger — March 6, 2008 @ 4:04 pm
CAH,
Amen to that! May God have mercy on us as a Nation.
Roger
Comment by Roger — March 6, 2008 @ 4:14 pm
One needs to be humble enough to admit when he’s wrong. This is the case here, where I need to bow down to Mike Butler and eat my words. I’m talking about my point on GOLD being expensive at $900 - $1,000 per oz.
This is the information I want to share with you. If there’s interest, I can reveal the source and discuss more about it. PLEASE READ!
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Miners Gasp to Keep up the Pace
——————————-
Across the globe, precious and industrial metals can’t be pulled out of the ground fast enough. Worldwide, mines are starting to show their age. The pace of production lags significantly behind demand. For instance …
Oil: It seems the more the giants grow and the greater their appetite for energy … the more threats we see to the available supplies — in the Persian Gulf, in Nigeria, Venezuela and elsewhere. Oil is on a collision course. And nothing can seem to avert it.
Gold: Production in South Africa, the world’s premier gold producer, recently hit its lowest level since 1923 (296.3 tons). Demand — both from industry and investors — is surging.
Silver: Above-ground stockpiles are dwindling, from over 220 billion ounces several years ago to probably less than 300 million ounces today. Mining cannot keep up with demand.
Copper: Despite soaring prices, many mines in South America are closing down. This means they are simply worked out.
Lead: Chinese demand has been surging. Meanwhile, global mine output only meets half of demand.
Uranium: And perhaps most pressing of all, there’s a chronic and acute shortage of uranium. Within the next decade, that supply-demand gap could widen to 20 million pounds!
Got A Spare Planet (or Two or Three), Anyone?
———————————————
According to The Worldwatch Institute, if China and India were to consume resources at the current U.S. per capita level, it would require two planet Earths just to sustain their economies.
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By no means I predict doomsday, all I see is supply > demand. Which equals to higher prices, which equals to inflation, which equals to YOU losing money.
As I’ve said, I stand corrected. I can no longer comment on the fact that GOLD is expensive or cheap.
I just sold all my mutual funds and stocks and it’s all in the money market now. Soon I need to make a decision. Also, my whole 401k is in a bank check right now. I just changed jobs and I had to transfer the funds from my old company to my new 401K provider, Fidelity. I have 60 days to mail in the check, but I already decided that I don’t want my 401K reinvested in US stocks. Any advices?
Roger
Comment by Roger — March 10, 2008 @ 8:43 am
www.garynorth.com
Comment by CAH — March 10, 2008 @ 10:48 am
Sorry, CAH… After the Y2K fiasco I refuse to take advices from Gary North.
He might be right sometimes, but not for the right reasons. Let me explain: Gary North looks for the end of the world as we know (end) AND then he fills the middle with current economic reasons (the means) to map the trail to his supposed end. So his logic is reversed, as he puts the “end” before the “meaans”. I prefer to have someone look at the “means” and then predict the “end” as best as one can.
Have you been around long enough to have witnessed Gary North’s fiasco on the Y2K issue? Or even his doomsday predictions through the 70’s and 80’s? I really don’t even want to waste my time talking about Mr. North’s take on the whole economy or anything else for that matter. I’d almost rather listen to Ben Bernanke.
Note: Oil is hit $107 a barrel, another historic high.
Comment by Roger — March 10, 2008 @ 12:33 pm
You guys are such a bunch of idiots, worrying for nothing! Look at the news this morning:
————————————————-
Economists see US avoiding recession
By ALEX VEIGA, AP Business Writer 2 hours, 24 minutes ago
LOS ANGELES - The U.S. economy will suffer as the slumping housing market eats away at job creation and consumer spending, but the nation should avoid slipping into a recession this year, according to a new economic report.
———————————————–
And the stock market just went up a bit. So, there. You guys like to over-exaggerate everything and worry for nothing. What’s wrong with you people??
Hmmm I think I’m going to try to get approved for a new car just to celebrate such good news! And I’ll bring a print-out of these news to attach to my credit application as evidence.
Comment by Roger — March 11, 2008 @ 9:08 am
Gold touched $1000/ounce today. The reaction to the Fed’s latest scam (accepting $200bn of housing debt as collateral) was greeted by the dollar falling even more.
And it is going to get worse. With the collapse of the dollar, gold and silver are going higher; much higher.
Roger is right about gold production, but that is not what is driving the price of gold. Gold is money and gold and the dollar work inversely. When the the dollar goes up, gold goes down. And as we have seen these past few years, when the dollar goes down, gold rises.
Comment by MRB — March 13, 2008 @ 4:55 pm
An excellent investment advice I received was a mutual fund that deals with precious metals, such as gold, silver, platinum.
Do your own research on USERX. It had excellent returns; the only drawback is that it requires a minimum of $5,000 to invest. I found it as an excellent alternative to US stocks and also as a protection against the falling dollar. The recommendation is to hold the fund for 2 years, in which case it might double, triple, or even quadruple in price. Just in 2008 it already gave a return of almost 20%. Again, do your own research.
This tip is just a freebie from the newsletter I subscribe and at least you get to look at something for free. I wish my 401K plan would offer such fund as an investment option.
Comment by Roger — March 14, 2008 @ 9:04 am
It’s 12:30 am here in Texas and I’m up watching the global markets sell-off. Monday will be ugly for the equity markets. Foreign buyers at the weekly treasury auction didn’t show up and that is a bad sign that the current financial conflagration is only getting worse. North is saying sell Gold systematically as it might correct once people realize that deflation not inflation is the next storm on the horizon. MRB or TJH…Your thoughts?
Comment by CAH — March 17, 2008 @ 12:42 am
CAH -
Well, I don’t pretend to have a tithe of North’s knowledge of economics. However . . .
(1) The investment banks are in trouble. Just ask Bear Stearns. Oh, wait. Bear is gone. (Pity the suckers who held shares in Bear. It went from $61.58 on Wednesday to $2.00 on Sunday.)
(2) The Fed will infuse as much liquidity into the system as necessary to keep the remaining big four banks in business. Their capacity to do this is infinite. If you can create “money” out of the air, there is no limit on how much you can print. Inflation is bad now and will only get worse.
(3) The rest of the central banks will be forced to follow the Fed’s lead. Failure to act will not only put their dollar holdings at even greater risk, but will suppress their nation’s/zone’s trade.
(4) With all or most currencies inflating, investors are going to move into gold and silver.
(5) There is no doubt that gold is going to experience gyrations, put the trend is up - short, middle and long term.
(6) I’m not a trader so I don’t worry about daily or weekly ups and downs. In fact, I am hoping that precious metals go down so that those and provide us with buying opportunities.
(7) The number one law in money is honesty. The dollar and all other currencies are based on fraud. From a principled point of view, I choose honest money.
(8) The number one law of investing is don’t buck the trend lines. Gold and silver are both fundamentally and technically in place to go much higher. How high? As the man of Steele says, “to the moon.”
(9) One qualification. If finances are tight, stock up on food and ammo. These are both more valuable than metals in a crisis. And I am firmly convinced we are headed into one greater that than which no one has experienced in many generations.
(10) I do not like to comment too much on economic matters. It is far outside my field of expertise. But when the tea leafs are so easy to read and nobody in the Reformed world is sounding the alarm, I feel duty bound to do so.
Please prepare for the worst. You can hold out hope that things will get better (I have no such hope), but prepare for tough times ahead.
Americans in general and evangelical Americans in particular believe they are immune to economic, political, and domestic crises, but we are not. And the stronger the denial, the harder the fall.
When a reporter asked Clubber Lang to predict the outcome of his upcoming fight with Rocky Balboa, he looks into the camera and says, “Pain!” That is my prediction for American in the next few years.
Comment by MRB — March 17, 2008 @ 12:12 pm
CAH,
I’m not MRB or TJH, nor their offspring, but if I may,
Many in the deflation camp(e.g. Mike Shedlock, Rick Ackerman) believe gold will do well in that environment as well. And as Voltaire pointed out, all paper money eventually returns to its true worth…zero. The road there may be full of detours but they all lead to the same destination. Even the noted Fabian George Bernard Shaw had enough sense to see through the lies of the government:
“You have a choice between trusting to the natural stability of gold and the honesty and intelligence of the members of government. And, with all due respect for these gentlemen, I advise you, as long as the capitalist system lasts, vote for gold.”
If you like your financial newsletters with a whiff of conspiracy, I recommend Bob Chapman and Bob Moriarty:
http://news.goldseek.com/InternationalForecaster/1205689845.php
http://www.321gold.com/editorials/moriarty/moriarty031708.html
Also Paul Craig Roberts’ most recent column has this:
“The resignation of Admiral William Fallon as US military commander in the Middle East probably signals a Bush Regime attack on Iran. Fallon said that there would be no US attack on Iran on his watch. As there was no reason for Fallon to resign, it is not farfetched to conclude that Bush has removed an obstacle to war with Iran.”
Finally, I agree with MRB about reading Jim Sinclair daily. He has steadied my rudder through many a disappointing dip. He has gravitas.
Got Gold?
Comment by DPW — March 17, 2008 @ 2:53 pm