I lost count how many articles I read in the last 24-hours that concluded with the Fed’s announcement yesterday’s, that they will keep interest rates near zero at least until 2014, and that QE3 was “on the table,” gold is now in a “risk-on rally” take off. It is a fact, central banks are now “printing money to a degree never seen in human history.” This is massive (overt and covert) QE.
This round of QE will carry with it profoundly damaging, risk creating and wealth destroying effects. David Stockman, President Reagan’s Budget Director, correctly called it “Monetary Heroin.”
Speaking of David Stockman, as I recall, when my lovely wife Susan was in her 30s and working for a Minneapolis advertising firm, one afternoon as she was in the lobby at General Mills, David Stockman was passing through. He tried his hardest to get her to go out with him for a drink. This much I must say – the man has very good taste (in women)! Susan has even better taste – she politely refused.
Yesterday, the phones were ringing non-stop. Funny how people always decide it’s time to buy after the prices start to move up. Sentiment really does rule the markets and even I react to the same emotions as our clients. I placed a large order for platinum for myself, in the morning. I am storing it over at Dakota Depository in Fargo where many of our clients store their precious metals too. I have been thinking about buying platinum for several weeks and probably waited longer than I should have – it cost me $160 an ounce more than necessary, because I was ready to move at $1,450 and my two week wait upped the purchase price to $1,610, but platinum is still very undervalued. Two years from now, $1,450 or $1,650 will look like a bargain. There are many reasons to consider buying platinum, and I have brought a few articles to your attention recently, and there is a good one in today’s newsletter by Chris Ackerman, but for me, the single most compelling reason is gold confiscation. Gold confiscation? What does that have to do with platinum? Everything! Although I consider it an unlikely event, it is still a possibility, and should it happen, you can be sure that platinum will not be part of the ultimatum. Can you even begin to imagine how valuable platinum will be if it will be illegal to own gold? You can’t? Neither can I, but it will be worth a fortune! I now own one fifth as much platinum as I do gold and will be able to (financially) survive a gold recall.
In today’s daily, the ever-interesting Bill Holter wrote,
The action in the precious metals yesterday was very, very significant and after pondering on it overnight I truly believe the 3rd and final “mania stage” has been kicked off. Let’s first look at the fundamentals. The Fed told you yesterday that they will foster a policy of negative (if they could create negative nominal rates I’m sure they would) real interest rates for at least 2 more years. We have also watched reported (probably fake) inventories of precious metals continue to drop. Central banks have become buyers of Gold while in the U.S. and Canada, sales of 1 oz. Eagles and Maples are now running at a faster pace than TOTAL production of all mines combined. Since Silver inventories in the U.S. and Canadian mints are nonexistent, if these coins are to be minted in the future, the mints must become buyers. Never mind industrial demand, jewelry demand, investment demand of bullion bars or anything else, the sales of 1oz. coins are eating up all supply.
Bill may be right. If this rally continues, yesterday could be the kickoff of the third stage of the bull market in precious metals, the Mania Stage. My friend, Trader David R, who I often quote in these pages (you won’t see him quoted elsewhere; he’s too busy making money), told me that he’s going to London next month and asked me if I wanted to come along. He said he would take me on a tour of JPMorgan’s gold vaults so I could “see” with my own eyes how much physical gold they are sitting on. I mention this because a long time ago, Jim Sinclair surprised me when he wrote that the people who are short now will be the same people who are long when the bull market takes off. Odds are that JPMorgan will not be buried by the move up; they will make more money on the move than anyone else. They play the market like a yo-yo and although it is, as many would say, blatantly illegal and pure manipulation, the fact is that they are very good at it and trust me, will not be left at the gates when the final whistle blows and the race to the gate commences. Yesterday may have signaled that the whistle has been blown.
When I asked Trader David R. where he stood on gold as of yesterday, he replied, “The FED is doing a better job making sure gold goes to $2,000 by the end of the year and you are safe to be long for the next 3 years!“ That statement was music to my ears, and you know how much I love music!
The brilliant Bill Holter wrote a great column yesterday (the first article in today’s daily). In it he pointed out, “Central banks have become buyers of Gold while in the U.S. and Canada, sales of 1 oz. Eagles and Maples are now running at a faster pace than TOTAL production of all mines combined.” As you know, I’m in the gold business and what he wrote is the truth. I’ve been warning you for a long time now that there will be shortages and the premiums on gold and silver eagles will increase. It’s coming!
According to Jim Wycoff at Kitco,
Technically, February gold futures prices Wednesday scored a big and bullish “outside day” up on the daily bar chart, whereby the high was higher and low was lower than the previous session’s trading range, with a higher close. The market saw important and technically bullish follow-through strength Thursday. Indeed, the bulls have gained fresh, solid upside technical momentum. A four-week-old uptrend is in place on the daily bar chart. Bulls’ next upside technical breakout objective is to produce a close above solid technical resistance at the December high of $1,767.10. Bears’ next near-term downside price objective is closing prices below chart support at $1,640.00. First resistance is seen at the overnight high of $1,720.50 and then at $1,725.00. First support is seen at $1,700.00 and then at $1,681.80.
March silver futures prices hit a fresh seven-week high overnight and scored a bullish “outside day” up on the daily bar chart Wednesday. Silver bulls have the overall near-term technical advantage and have gained fresh upside momentum. A four-week-old uptrend is in place on the daily bar chart. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at the December high of $33.74 an ounce. The next downside price breakout objective for the bears is closing prices below major psychological support at $30.00. First resistance is seen at $33.74 and then at $34.00. Next support is seen at the overnight low of $32.97 and then at $32.50.
Jim Sinclair provides a more interesting view of where gold is headed. I love his Angel charts!
The following link is to a short eight-minute speech by Judge Andrew Napolitano and was sent to me by one of our readers. Susan and I watched it this morning, and were speechless. You will be too. Do you believe America is The Land of the Free and the Home of the Brave? Please check out what Judge Napolatino has to say about our freedoms.
|Judge Andrew Napolitano Natural Rights Patriot Act|