Now buy gold and silver to profit from the Wall Street crash!
The bankruptcy of Lehman Brothers is going to be a severe test for the Wall Street investment banks and the counterparty risk that they are exposed to through derivatives. This could well precipitate a crisis of confidence in the entire US banking system which has piled up derivative exposure equivalent to hundreds of times the nation’s GDP.
Anybody who has been thinking about dumping their US stocks has probably now left it too late, as everybody is going to head to the exit at the same time. Why should confidence be maintained in the face of such massive uncertainty?
What you can do is be very nimble about buying the only asset class, aside from bonds, that stands to profit in this situation: precious metals. The dollar is bound to resume its weakness, if only for one reason: the Fed is going to have to cut interest rates again to try to restore confidence.
Gold has fallen in value over the past couple of months while the dollar rallied in value. That rally is now over, and the dollar will fall sharply. This will bring gold and silver prices back to their earlier levels, and on to new all-time highs.
If you want to be clever then you should be buying the heavily discounted gold and silver producer’s shares tonight. On Friday we saw a bounce in precious metal stock prices across the board, and this is just a small taster for the real thing.
For maximum gain buy the junior gold explorers which have been most sold down over the past two months. This is a huge opportunity and a chance for people who have been losers in the precious metals sector over the summer to make amends and then some.
THE PRICE OF GOLD WENT UP 6 MONTHS LAST YEAR FROM THIS TIME UNTIL AFTER XMAS GET READY FOR A RIDE TO $2000 GOLD BY NEXT MAY AND WATCH YOUR MONEY GROW FOLKS
liam
September 22, 2008 at 2:49 pm
From Goldseek.com today…
The dollar and other fiat currencies are set to come under significant pressure in the coming months as central banks attempt to stop a 1930’s style wholesale liquidation and deflation. This will lead to huge safe haven demand for gold internationally and to higher gold prices as it did in the 1930’s when gold was revalued from a fixed price of $22/oz to $35/oz. In 1933 gold was revalued by President Roosevelt from $22 to $35 or by some 60% overnight. Therefore even in a massive deflationary event gold massively outperformed all asset classes and performed its safe haven role.
peterjcooper
September 17, 2008 at 12:33 pm
Yes Peter.
This is alarming.
The Fed effectively now becomes a holder, a “long” on equities.
It now becomes in the Feds interest to interfere in the equity markets, at company level, to support their own holdings.
This is insane, it is not capitalism, it is corruption, total corruption.
Add in another ban on short selling of (mostly) “primary dealers”, to preserve the T-Bill distribution channels, and the Fed, um, associates, and we have a brand of communism. State control.
The Fed is also seeking oversight rights on brokers positions, etc, etc., that would give it the ability, as far as I understand it anyway, to manipulate commodities, foodstuffs, metals etc, in fact everything traded.
Someone somewhere should be blowing an enormous whistle!
me
September 16, 2008 at 7:09 pm
San Francisco Chronicle today…
“what it did to console other firms – expanding its status as the lender of last resort by agreeing to accept other collateral, including equities and securities that don’t have AAA ratings, for loans and Treasury bonds – may wind up being even more dangerous. If the Fed’s balance sheet gets gunked up with bad assets, the result will be serious inflation and mass investor flight into stronger assets and currencies.”
peterjcooper
September 16, 2008 at 3:32 pm
Eric in Seattle.
You should study this link here.
It says that on 1st Aug, the ECB sold gold heavily. Also China bought $ heavily.
US system was on point of collapse.
Not everything happens on your side of the pond.
This went totally unreported in the “West”Read here
Also, study this quote.
Gold gained about $10 in early morning trading in the Far East on Thursday, but that vanished the moment London opened, and the lows of the day were at the London p.m. fix. Silver’s chart was similar. The HUI was down a bit, but gave it the old college try in its attempt to finish in positive territory. Although the prices of both metals were down, it was a pretty constructive day from a technical point of view.
I note that South Africa’s gold production in July was down 16.4% y/y. Physical gold demand continues to be off the charts. In a story posted at Kitco, dealers reported a shortage in gold bars in Singapore and Hong Kong. Indian premiums yesterday were “hugely above import point” according to the usual NY commentator. My bullion dealer here in town is currently quoting January delivery on new silver orders.
As I’ve said many, many times…physical supply or demand mean absolutely nothing when it comes to price! 90% of price action is determined by the interplay between the tech funds in the Non-Commercial category (of the COT) and the ‘2 or 3′ U.S. bullion banks in the Commercial category…who’s buying, who’s selling, and how much. Nothing else matters.
In another piece of interesting news, I see that (unlike the GLD ETF) there was no change in the SLV ETF yesterday…despite the fact that the silver price got creamed all week. Maybe they’ll show a drop in it today. But it’s pretty obvious that the market now has a different set of rules that apply to physical gold…than those that apply to physical silver. And so they should. That should tell us a lot.
I got an e-mail question yesterday that I want to share…and I get this question all the time. Hopefully, neither I (nor Ted Butler) will get it again if I answer it in public too…”Why is the CFTC doing nothing? I thought they are the regulators.”
Answer: They’re supposed to be, but they’re not doing their job. Their real job is to protect the shorts in gold and silver…and other markets of interest. The chairman of the CFTC is a member of the President’s Working Group on Financial Markets. He does what he’s told to do…and he’s doing what he’s being told to do right now!
So there you have it.
Presidential orders are to protect, (ignore) the 2 or 3 banks with massive short positions in the futures of gold and silver metals, positions that are so large that they are absolutely manipulative, and incidentally illegal.
How long will the President’s Working Group on Financial Markets exist?
Who knows.
How long before a silver, or gold exporting country, with costs higher than current prices, (and there are a few) will say to the US, no more exports to your country? Many industrial users need silver!
Who knows.
How long before miners get together, open their own market dealing system, which excludes these parasites?
Who knows.
In as far as PMs are regarded as competition for the fiat system, which under the Fed abuse has totally failed, it is important that PMs are crushed.
Their decline has matched that of ordinary commodities recently, and they have been manipulated in this way. They have been made to appear as other commods for that reason.
This is not capitalism.
This is corruption.
The point when GS short position on PMs is exceeded by its long position on PMs is the moment to watch for.
Also, take a stroll through these archives.
Here
Enjoy!
me
September 16, 2008 at 11:44 am
1. John stick with your juniors – you will be amazed what happens next.
2. Eric – the volume of physical gold sales in the UAE right now is very, very high, and as you say this is a conundrum as the Comex is selling down. But this is very healthy: speculative demand is being replaced by retail demand – and once the specs are out that will only leave the retail demand. What do you think the public will trust now as an investment class, with the US financial system in crisis? The Vietnamese government has just introduced new regulations to control physical gold sales – as the peasants of the world buy into precious metals do you imagine the price of this product with limited supply will not go up, and up, and up!
peterjcooper
September 16, 2008 at 8:40 am
Ponder the fact that AIG may be bankrupt by Wednesday. Oooh, that’s gonna’ leave a mark!
Re: Gold – Here’s the curious and peculiar thing about the price of gold that’s been bugging me:
>>PRECIOUS METALS CONUNDRUM
Physical gold and silver have grown scarce among dealers around the globe. Delivery delays and high premiums are common, from New York to London, from Dubai to Mumbai. According to Swiss bank UBS, the world’s largest gold bullion trader, “Physical demand continues at a record pace.” At the very same time, the paper prices of gold and silver have plunged, along with the stocks of the entire gold and silver mining industry. UBS notes that “huge liquidation of long positions on the Comex and OTC markets have been the major reason for the fall in gold prices.” Customers world-wide are paying large premiums for an asset that has been plunging in price. Extremely curious.<<
“It would be so nice if everything made sense for a change.” – Alice (in Wonderland)
(Qoutes taken from Financial Sense Online.com, in the Market WrapUp for 15 Sept 08)
Eric in Seattle
September 16, 2008 at 6:30 am
I hope you are correct, but it would take a brave person to pile into explorers today. Explorers burn money, money which is in short supply and very expensive thanks to the current crisis. My explorers are so depressed at the moment they are not even worth my while selling so I’ll be holding them until they either fold, or until they take off again because they can get access to funding should Bernanke reflate and gold rise back over $1000. Stick with junior producers for the time being who can at least finance themselves.
john east
September 15, 2008 at 9:19 pm