Thursday, January 03, 2008

Flee all Assets that Promise to Pay Future Dollars, & Place the Proceeds into Silver & Gold

Gold Price Close Today : 866.40
Change: $9.40 or 1.1%

Silver Price Close Today : 15.382
Change: 21 cents or 1.4%

US Dollar Index Today: 75.88
Change: -0.12 or -0.2%

The GOLD PRICE jumped another US $9.40 today to close at US$866.40 while the SILVER PRICE leapt 21.50 cents to close at 1538.20 cents. So far, so good, but there's just one little thing nagging at me. More of that below.

STOCKS bravely did nothing today, the Dow rising 12.76 while the S&P 500 remained unchanged. Of course, the Dow did something when measured against gold by the Dow in Gold Dollars. The DiG$ closed at another new post-1999-high low, G$311.53 (15.070 ounces -- how's that for a confusing sentence?) Point is, stocks continue to lose value against gold and against silver, just as the DiG$ keeps on forecasting.

For the last 5 years or so I have in every commentary urged y'all to swap stocks for silver & gold. In the meantime, stocks have lost about half their value against silver & gold. How much longer do y'all want to wait?

The US DOLLAR INDEX presents one of the worst challenges a writer ever faced. How do you keep on inventing, day after day after day, a new metaphor to describe something that unfailingly sinks? Yes, yes, I know that it is most likely in the process of turning around, and that will take a while. But by the time the dollar gets turned around there may not be any road left. Flee all assets that promise to pay future dollars, & place the proceeds into silver & gold. Those assets include bank deposits, certificates of depreciation -- whoops, make that certificates of deposit -- annuities, bonds, pensions.

The GOLD/SILVER RATIO dropped 3/10% today, and should soon begin a steep decline. Last call for swaps out of gold into silver!

Why have premiums on gold & silver items fallen so hard? The buy side premium on 90% coin has fallen from -40 before Christmas to -70 cents now. Meanwhile gold American Eagle premiums have fallen from over 3% to 2% or less. That may reflect passing cash flow problems, or too many sellers facing too few buyers. Either way, it is a small check on a metals' bull's enthusiasm.

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.