Friday, December 21, 2007

Buying Gold Now is Less a Matter of Watching Gold Prices & More a Matter of "Get Some at Any Price."

Gold Price Close Today : 811.60
Gold Price Close Last Friday: 793.30
Change: 18.30 or 2.3%

Silver Price Close Today : 14.346
Silver Price Close Last Friday: 13.826
Change: 52 cents or 3.8%

US Dollar Index Today: 77.687
US Dollar Index Last Friday: 77.396
Change: 0.291 or 0.4%

It's difficult to judge price movements around Christmas time, since traders square off their positions to avoid carrying them over the holiday. Clearly, nobody wanted to stay short silver or gold over the weekend. Yesterday I said the gold price needed to close over $813.50 & silver over $1419.60 to break out of their ranges. Lo, what happened?

The GOLD PRICE rose $12.40 to close at $811.60, not quite enough, while the SILVER PRICE blasted up 15 cents to end the day at $14.346. Silver shorts were paying large money to cover, but I wouldn't call that a breakout, here at Christmas. I believe we will have to wait until next year to gauge real direction, and that, I believe, will be firmly up.

STOCKS today rose briskly, with the Dow up 205 &, more impressively, the S&P up 24. O, I fear for stocks this coming year! Bad news awaits.

My friend RL called yesterday & said, "The firehouses are on fire!" He was talking about the companies that insure bond issues. Lured by greed (like everybody else) they foolishly insured CDOs & MBSs & now find they have reserves nowhere big enough to match such cosmic losses. The rating agencies are downgrading them. Oh, the subprime losses are only beginning.

Without exaggerating, I believe this is the worst financial crisis in my lifetime. Some sort of leadership (bigger than any those pygmies in Washington can offer) will be needed for the banking system to survive this.

Batten down your hatches. Buying gold now is less a matter of watching prices & more a matter of "get some at any price."

The US DOLLAR INDEX continues to hold up over 77. It is building a base for a rally that will carry to 80 or so, & last a number of months before it, too, disappoints & collapses. Put not your trust in fiat money.

In yesterday's commentary I asked y'all to pray for my son Justin's daughter, Caroline, age 5 months who was hospitalized with double pneumonia. On doctor's advice this morning Justin & Ellen moved Caroline to Vanderbilt Children's Hospital in Nashville. There the doctors said she does not have pneumonia but congestive heart failure caused by an unclosed hole in her heart & a constricted aorta. They also say that 95% of infants with these problems lead normal lives after several surgeries. However, right now Caroline is very sick.

My great nephew Colin's surgery yesterday removed 98% of a huge tumour on his kidney, which had not metastasized. He is 18 months old. So far, so good, but a very long row to hoe yet.

Would you please continue to pray for Caroline, that by God's grace she would heal and recover? Pray also for Justin & Ellen, exhausted with yet more challenges again, that God would renew their strength & bear them up on eagle's wings.

Pray, too, for little Colin Sanders, that God would heal him, and that right soon. Please pray for his father & mother, Brett & Mindy, that God would give them grace to bear this burden patiently & with good hope.

- Franklin Sanders, The Moneychanger