Friday, August 24, 2007

24 August 2007 Began the Hyperinflation That Finally Destroyed the American Dollar

Gold Price Close Last Week : 656.90
Gold Price Close This Week: 668.00
Change: 11.10 or 1.7%

Silver Price Close Last Week : 1177.2
Silver Price Close This Week: 1192.5
Change: 15.30 cents or 1.3%

On this day in history, 24 August 2007 began the hyperinflation that finally destroyed the American dollar. Oh, that destruction had been underway since the Federal Reserve was created in 1913, and the stage had been set in the crisis leading up to 1980. That crisis scared the Fed & Treasury so badly that they wrung out of congress the Monetary Control Act which allowed them to buy or discount any sort of commercial paper, domestic or foreign. That was a power they were reluctant to use, however, until last week when they did repos for some $36 billion, & who knows how much since. Today the Fed announced it will accept asset-backed commercial paper as collateral. Now that comes backed by various assets, car loans, credit card debt, and of course, mortgages, but it's only mortgage backed securities that are in trouble.

In effect, today the Fed announced it will accept even worthless paper as collateral. That's not exactly buying it, but it's close enough.

What meaneth this portent? That the Fed will shoot their mothers in front of a cop, if necessary, to bail out the banking system & Wall Street. It is the signal that they will unhesitatingly destroy the dollar to "save the system." Of course, that will destroy your savings, pension, & investments, but, Hey! Ya can't make an omelette without breaking eggs, right? As long as you hold dollars, you are making yourself the willing victim of this fraud.

If you are waiting for stocks to recover, you will wait in vain. Bottom hasn't been seen yet. Today marks near completion of 50% recovery (13,423.10 would be 50% of fall from 14,000.41), about time for stocks to fall again. Use any rally to get out of stocks. Put the proceeds into silver & gold.

On the Fed's announcement it was banishing common sense from its operations the US dollar index fell nearly 50 basis points. Clearly, I am not the only dolt who interpreted the Fed's announcement as inflationary. Dollar rally aborted, probably will resume.

Silver & Gold both jumped at the Fed's babblings, up 30.2 cents & $9.10. Unfortunately, another crash in stocks may take them down once more. If gold climbs above 670.50 on Monday, it would signal a rise to 688 & big trouble for the Fed. However, also likely is that both silver & gold will trade sideways to lower into the seasonal turnaround time, October-November. If you see gold over 688, just buy all gold you can get and pull your hat around your ears.

Don't be confused: silver & gold remain in a long term bull market, & y'all should buy on every decline. Sell all dollar denominated investments, especially those that entitle you to receive future dollars.

The GOLD/SILVER RATIO may rise as high as 60 while financial panic sends relatively more people scurrying to gold for shelter. Swap gold for silver at any ratio of 59 or more. And yes, swaps even at 57 are a good idea.

Argentum et aurum comparenda sunt -- -- Gold and silver must be bought.

- Franklin Sanders, The Moneychanger

"Buy Silver and Gold Coins at the Best Prices"

To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold's primary trend is up, targeting at least $1,250.00; silver's primary is up targeting 16:1 gold/silver ratio or $78.13; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold; US$ or US$-denominated assets, primary trend down; real estate in a bubble, primary trend way down.