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In his most recent newsletter, Ted Butler made the point that once investors get over their shock at silver being available below $20, and figure out that it is now below the cost of production, they will start accumulating it in a big way.  I think the same can be said for gold, though to a lesser extent.  Gold is cheap.  Silver is the bargain of the decade.

“Once existing silver investors get over the shock of what just occurred to the price, they are likely to assess the situation in light of the new realities of what it really costs to produce an ounce of silver and conclude it is now one heck of a buy, all things considered. If there’s been a better opportunity to buy silver at a super cheap price over the past three years, I don’t know when that better time may have been. If there’s been a better time to average down and reduce one’s cost basis than now, it escapes me when that was. Moving below the cost of production looks increasingly like the straw that broke the camel’s back.”

– Ted Butler, Butler Research

In the Sunday edition of the Minneapolis Star Tribune, on the front page, there was a story about how interest rates are rising, since Bernanke’s recent speech suggesting that the Fed would cut back on QE, threatening the housing market recovery.  Yes, rising interest rates will kill the housing market – and the stock market – and especially the bond market.  So do you really think that Ben Bernanke will leave, as a legacy? Or that he was the one who was responsible for the tanking of the economy?  That doesn’t sound reasonable to me!

$85 billion a month is what it now takes to keep everything from tanking.  Just the mention of cutting back is causing markets to shake and stumble.  Do you think that Jim Sinclair sees things clearly when he says, “QE to infinity,” or is he just aging and no longer understands the way markets work?  Rationally speaking, what do you think?

The trouble is the markets are NOT acting rational!  And they haven’t been for quite a while, certainly not since 2008.  And they may not act rational for the next few days, or weeks or even months, but sooner, than later, they will reflect the reality that it is being manipulated and hidden from view.  Best idea is that you should be on the right side of things when the truth shines through.  Do not let the “paper” price of gold and silver, on the COMEX, mislead you.  The case for precious metals grows stronger by the day – and the harder they try and suppress it, the better it is for those with the conviction to take advantage of this very unnatural situation.  Quite simply, QE to infinity is necessary to keep the politicians in office and it will be the undoing of the dollar, which will be reflected in a runaway bull market in gold and silver.  It’s not complicated.  Just don’t be fooled.