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From David’s Desk

For those of you who think I take things too seriously, and wish I would lighten up a bit, I want you to know that deep down, I am a very funny guy and am not serious about much of anything (except this newsletter).  So, I shall lighten up a bit on this lovely Friday morning and usher in the weekend with the following:


Magic, like this, is similar to the way JPM and HSBC miraculously cause gold and silver to collapse, out of nowhere and for no particular reason.

I guess little Timmy Geithner and the boys over at JPM freaked out when silver roared past $38 and gold hit another all-time high of $1,448.60.  Can’t allow that to happen, no siree!  What the media calls “profit taking” I call blatant manipulation.  This kind of selling is NOT “profit” motivated.

Just take a look at the sudden steep drop at the end of the day’s trading in NY, between 1:00 and 2:00, Thursday afternoon.  JPM dropped its bids and flooded the market with contracts and the result was the waterfall plunge in gold’s price. This is a PAPER raid and has nothing to do with the demand for real PHYSICAL gold.  Most likely, it was orchestrated by JPM and HSBC in an effort to stop silver’s meteoric rise since silver generally trades in sympathy with gold.  Take down gold and you take down silver too.  Don’t ya just love these free markets???

Goldman Predicts A Big Move Higher In Gold
Gus Lubin

Goldman Sachs is still bullish on gold. In a March 17 note, the bank predicted a move to $1480 in the next three months..

“Optimism over the state of the global economic recovery at the start of the year, which drove US real interest rates sharply higher – and gold prices lower – has been tempered by the ongoing events in the Middle East and North Africa (MENA) and Japan, sending the 10-year US TIPS yield down to near 80 bp, setting the stage for the next gold price rally.

We expect gold prices to rally toward our 3-month price target of$1480/t oz, and continue to recommend a long gold trade. While the protests and threat to oil supplies in the Middle East and North Africa drove COMEX gold prices to a new record high of $1437/t oz on March 2, the events in Japan have paradoxically sent gold prices back below $1400/t oz despite the ongoing decline in US 10-year TIPS yields. Given the decline in US real interest rates, we see the recent retracement in gold prices as offering a good buying opportunity, and maintain our long gold trading recommendation as we expect gold to rally to our 3-month price target of $1480/t oz.

We see strong upside to gold prices in the near term, but continue to expect rising US real rates to lead prices to peak in 2012.  We expect gold prices to move higher throughout 2011, but continue to believe that gold at current price levels is a compelling trade, not a long-term investment. In particular, we expect that as US real interest rates rise with the recovery in the US economy, gold prices will likely reach a peak in 2012.”

Goldman’s Jan Hatzius previously named $1690 as a year-end target

The Prudent Squirrel and Chris Laird are getting very concerned about where things are headed.

From Prudent Squirrel

Food is going even more critical than we have been discussing. Texas cattle and grain are suffering the worst drought in 44 years. Corn reserves we thought would go to rationing next year…but now we think it happens this year. Many nations throughout the world that were grain exporters have now stopped selling on exports to conserve food for themselves. The poorest nations get hit first and the hardest. We see a huge famine developing in Africa.

Wish the news was better but we work to tell the truth. Protect family and friends. Get rid of debts. Hunker down and stock up the household with months of supplies. Things are going very ugly, very fast. So far stock markets are hanging on but you have to wonder how much longer can this last? – Traderrog

From Chris Laird

Needless to say, PS readers are supposed to have basic supplies by now and if not, don’t panic, but calmly purchase some foods, and don’t be obvious about it.

Your countermeasures

Well, cash is the first line of defense, after you have your home prepped. Especially if the markets are already tipping, maybe just as well to liquidate more, not all, but more into cash.

Gold? Sure, but remember it suffers in big crashes.

Also, frankly, with the chaotic situation, it’s better not to try and speculate here, right?

Better to wait and see- Talk about an understatement!

Forward pay mandatory bills. Have lots of cash. Prepare in advance some alternate location if you have one already.


David Schectman

Miles Franklin