In today’s daily, there are two short, but interesting articles on silver. You might want to check them out.
Jim Sinclair says a Cyprus-like bail in is coming to Europe. If so, it won’t be long before it pays us a visit too. That will affect any of our readers that have over $100,000 in the bank. Read Jim’s short article below and think about this carefully. If you decide to withdraw your $100,000 I bet you will be shocked to see the hoops you will have to jump through to get your cash out of the bank. An easier way would be to write a check to your gold dealer, hopefully that is Miles Franklin, and bring home 71 or 72 ounces of gold. I don’t know about you, but that would be my preference.
Is the economy strong or weak?
Depending on who you listen to, the economy is either strong or it is weak. The Fed says it’s on the mend and four Fed governors are suggesting that “easing” off on QE is not far off. That’s nothing new, and there is a big difference between “easing” and “stopping” it. They can’t stop. Even the suggestion of easing threw the global markets into a tizzy not long ago. Still, what’s the big deal – $85 billion/month or $70 billion/month? Does it make that much difference? The markets will tell you. I would expect any market that is interest rate sensitive would take a quick tumble and the Gold Cartel would use the headline to attack gold. We’ll find out after the Fed’s September meeting, in mid-September.
Back to the question, is it strong or weak? Wall Street says the economy is strong. I’m not so sure. I understand that three quarters of the new jobs created during Obama’s leadership have been PART TIME JOBS. It’s very hard to make ends meet on a part time salary. Most of the folks I talk to are not seeing the growth in the economy. Some have made nice gains in their stock portfolio, but what Mother Nature gives, Mother Nature can take back. Harry Dent, who I never cared much for myself, now says the Dow will drop to 3300. So? It could, but there are many people who expect the Dow to rise thousands of points. It’s the usual noise that leads only to more confusion.
People really don’t know what to do. There is no point is keeping a lot of money in a CD or very low-yield savings account. Interest rates must rise, at some point soon, and if the Fed dares to cut back on bond purchases the bond market bubble will start leaking air. No one I know keeps their money in bonds. Actually I take that back. I have met quite a few folks in Florida who have most of their wealth in bonds, muni bonds. They’ve done well until the Detroit story spreads to municipalities around the country. Bill Gross says bonds are not the place to be now, especially treasuries and who knows the bond market better than Bill Gross?
I used to think that gold was a safe place to be. It was for 11 years – and then the Fed orchestrated a dramatic two-day take down in gold on April 12 and 15. GATA’s Chris Powell says it was only possible with the assistance of the Bank of England’s 1200 tonnes swap of gold. That “cost” us gold bugs around $300 an ounce. It will come back. It wasn’t a “natural” event and things always resort back to the mean. It’s not that gold lost its “island of safety” status, it’s just that the Fed decided to teach us a lesson; gold is volatile and silver even more so. O.K. they made their point. But an island of safety is not something you judge over a few months or even over a couple of years in the midst of a long-term, 11-year old bull market. The fat lady hasn’t sung yet.
Is the economy strong or weak? Is gold going up or down? I’ve got the answer for you. Yes! That’s the best answer I can give you and it’s the only answer that anyone can give you. You fill in the rest yourself.
These are not normal times, unless, God help us, this is the “new normal.” I really am worried about a new Black Swan event. Black Swans do exist. My friend Bill Mack, the well-known relief artist, has his factory and art gallery in a well know former restaurant here in Minneapolis. It used to be called the Camelot. It looks like a medieval castle – with a moat! Bill purchased two black swans that swim around in the moat! So, I know that black swans do exist. I kind of expect the next one to appear in the mid-east. I know they are big on goat over there, but I think they’re getting ready to serve up a juicy black swan.
I think Richard Russell is right (he usually is). It is best to be mostly in cash and physical gold. He very recently had a change of heart and on Friday he wrote:
Below is a chart showing the ratio of gold to the Dow. What we see here are rising bottoms. It wouldn’t surprise me to see gold outpace the Dow for a time. If this ratio breaks out to a new high, the gold bull market will be back again in all its glory.
The Dow has suddenly sold off. I quickly made the chart below, showing the Dow breaking down. The P&F projection or target for the Dow is 15,000. Extreme caution is now in order.
While I’m at it, I’m showing the long Treasury bond below. Bernanke can control the short rates but the bond market is a law unto itself. Below we see the 30-year Treasury bond about to break below its trendline — the bond has a P&F projection of 114. If that projection comes to pass, long interest rates will kill the economy.
I’ve warned that if there’s to be trouble, it will show up in stocks, bonds (rates), the dollar or gold. I think we’re seeing the early signs of trouble now — in stocks and bonds and maybe, just maybe, in gold.
–Dow Theory Letters, August 9, 2013
Who said it was going to be easy? There is potential trouble everywhere you look – the stock market, the bond market, even gold. I’ll take MY chances with gold. I am certain that it is THE place to be until the bull market is finally over. How about 2016 – 2020 for an educated guess. But it’s just a guess, since no one knows for sure, not even that once upon a time psychic, Jim Sinclair. His track record is no longer perfect (darn) but I’ll take it over most other “analysts.” Even Ted Williams swung and missed every now and then.
I’m going to wrap up my conversation with a warning, not to make that a prediction… The dollar WILL lose its reserve currency status. The wheels are now in motion. The Chinese, Indians, Japanese and Russians, to name but a few, are already trading with each other in their own currencies. The trades are outside of the dollar. The Russians and Chinese central bankers have publically stated the world is ready for a new reserve currency. The US is ticking off the Saudi’s with our policy in Egypt and Syria. We are not backing the Sunni governments and the Saudi’s hate and fear the Shiites. All they have to do is start to accept payment for their oil in non-dollar currencies and the beginning of the end is with us. If you want to know what that means for Americans, well Europeans pay between $6 and $10 a gallon for gas. So will we, if the dollar loses its reserve currency status. It’s coming. When it does, it will happen very quickly and then gold and silver will no longer be priced in dollars. Be prepared to pay much, much more for gold and silver as well. Bill Holter likes to call it, “The Monday morning you wake up and find out that gold is up a few hundred dollars, and no one will sell it to you moment.”
It’s 7:00pm EDT on Sunday evening and I just glanced at the screen and gold is UP $16 bucks and back to $1330 per the graph below, where it spent quite a bit of time until recently. This is the thinly traded Asian market and it doesn’t mean much, but it is still nice to see.
24hr Gold 1330.20 +15.50