Nation of Cards » gold

Silver and Gold Buying Opportunity?

admin — Thu, 26 Feb 2009 13:09:33 +0000

“Franklin Sanders” at the Silver and Gold blog, thinks that this gold and silver price plunge is short-term and represents a strong buying opportunity, with gold bottoming in the $925-$890 range.

FWIW, I’d agree. This looks like standard profit-taking and runs strongly counter to the ongoing drumbeat of profligate spending and tax increase news piled atop negative economic reports and continued bailout needs.

Silver and gold prices continued correcting today. The Gold Price dropped 3.40 to close at US$965.70 at the Comex close 12:30 Central time, but dropped US$15 in the aftermarket, on no news that I saw. Gold must reckon here with a correction to US$925 – US$890. I expect this weakness will pass quickly, say, two or three weeks at most.

The Silver Price dropped only 12 cents today to $13.8750, but shaved off another 23.5 cents in the aftermarket to $13.64. The same normal, natural correction has hit both metals. Silver has strong support at 13.50,13.20,12.80,12.50, 12.00 and 11.00.

via Silver and Gold Prices: Silver and Gold Prices are Presenting Yall With a Rare Buying Opportunity – Watch, and Dont Miss It.

Schiff, Gold, and the Dow

admin — Thu, 12 Feb 2009 14:56:15 +0000

Peter Schiff appears on the Laura Ingraham show this morning.

One of the more interesting points he makes is evaluating the value of the Dow in light of ounces of gold. When Bush took office, the Dow was roughly 42 ounces of gold. Now it’s about 9. He expects that by the time Obama leaves office, it’s likely to be around one ounce of gold in value.

He compares the attempts to “fix” the economy to attempting to recreate the debt-based house of cards.

His advice is the same that it’s been for a while, which is refreshing considering that he’s taken some heat for it recently: gold, silver, foreign currency (he calls the dollar’s recent surge a false rally), and foreign stocks and bonds.

Bad Medicine

admin — Sat, 20 Dec 2008 14:46:28 +0000

There’s a great article on the Fed, the history of easy money, and the likely consequences in the Saturday WSJ.

Highlights:

Barely nudging Mr. Madoff out of the top of the news was the Federal Reserve’s announcement last Tuesday that it intends to debase its own paper money. The year just ending has been a time of confusion as much as it has been of loss. But here, at least, was the bright beam of clarity. Specifically, the Fed pledged to print dollars in unlimited volume and to trim its funds rate, if necessary, all the way to zero. Nor would it rest on its laurels even at an interest rate low enough to drive the creditor class back to work. It would, on the contrary, “continue to consider ways of using its balance sheet to further support credit markets and economic activity.”

and

One market, only, registered a protest. The Fed’s declaration of inflationary intent knocked the dollar for a loop against gold and foreign currencies. In many different languages and from many time zones came the question, “Tell me, again, now that the dollar yields so little, why do we own it?”

Great question. Maybe we can help Ben out with a few potential answers for our friends who are (barely) propping up the US economy:

We’re #1!
“If you don’t, the terrorists win”?
USA! USA! USA!
It’s good for you. Like spinach.
You might be losing money, but you’ll make it up in volume.

In our American reader’s case… “Because you have to”? No, we don’t have to. We may be paid in dollars, but a variety of non-dollar or contra-dollar alternatives exist. We’ll look into them over the coming weeks.

Dollar “Attacked”

admin — Wed, 17 Dec 2008 12:54:18 +0000

Stunningly easy money continues to be shoveled into the markets. The negative effects are apparent to those who are paying attention, as highlighted in this Bloomberg article:

“The dollar will go to new lows as the U.S. attacks its currency (out emphasis),” said John Taylor, chairman of New York-based FX Concepts Inc., which manages about $14.5 billion of currencies.

As we discussed earlier, the dollar appears to be in decline again. Whether it will turn into a full-fledged “run” on the dollar at this time remains to be seen. But the surge of the last few months brought on by year-end settlements appears to have run its course and is evaporating as we watch. The Fed’s actions and Bush / Obama pronouncements are pouring fuel on the fire.

The immediate outcomes? Commodity prices, which are declining significantly in “real” or even “Euro” or “Yen” terms, are likely to be flat to increasing for Dollar-based consumers. The tailwinds that bring an economy out of recession will be weak or non-existant. Stagflation is likely.

Disruptive events notwithstanding, this is going to be a terrible time to be in the dollar. Occasional 4% surges in the Dow are meaningless when countered by coincident 4% increases in EURUSD (better than $1.40 as of now)!

Investing in currencies looks like a good course of action, but understanding the details of how to do that wisely is important. (Any experienced suggestions are appreciated!)

Bailout Dead For Now… Markets Reacting?

admin — Fri, 12 Dec 2008 13:15:47 +0000

It looks like the Senate did the right thing. Now it depends on the President to do the right thing (for a change) and let the bankruptcy reorganize the companies in the courts instead of hooking up the taxpayer IVs and letting the politicians get their fingers in:

The Senate rejected the bailout 52-35 on a procedural vote — well short of the 60 required — after the talks fell apart.

“I dread looking at Wall Street,” said Senate Majority Leader Harry Reid in anticipation of Friday’s stock market reaction. “It’s not going to be a pleasant sight.”

Gee, Harry, not a pleasant sight? I suspect it won’t look any worse than many of the days over the past few months. Besides, since when have you been concerned about Wall Street? I thought you were all about “the working people”?

Stock futures are down, foreign markets are down about 3%, the dollar’s regaining a little versus the Euro, and oil is retreating further. Hard to tell if it’s based on the news. Perhaps if the President announces a plan we’ll see the reaction in a lower dollar, higher oil and gold. It’s not going to be a pleasant sight…