Thursday, September 18, 2008

Yesterday the Gold Price Staged its Largest One Day Rise in History, US$70.10 up 11%

Gold Price Close Today: 892.70
Change: 46.10 or 5.4%

Silver Price Close Today: 12.648
Change: 1.028 or 8.8%

Mercy! What a nut house we live in. The gold price today rose as high as US$920 and the silver price up to $12.98, then about 14:30 Eastern time they crashed and stocks rallied. The gold price dropped as low as $838 and the silver price to $11.90, after closing at $12.648 and $892.70.

Stocks ended with a big up day. Well, wait, that's not quite true. The Dow rose 406.45 points on the day, but that's after losing 900 points over two days this week. Point is, the Dow managed to climb over 11,000 to close at 11,016.11. US Dollar index rose a ponderous 11 basis points to 78.24.

Lo, what worked this alchemical change upon the market so suddenly? This is where the nut house comes in. US Treasury secretary Hank "the Honker" Paulson met with congress and spoke about a plan "to deal with bad debt similar to the creation of the Resolution Trust Corporation in 1989 that resolved the US savings and loan crisis." That caused the market to rally. Now get this: there is no plan. There was no deal. No resolution is in order. Hank the Honker merely "spoke about" a plan. Spider webs. Er spinnt. Yet stocks were looking for an excuse to rally. Yesterday 1,200 stocks made new lows, and any day when 1,000 or more stocks make new lows always points out a bottom.

Welcome, O victims, to the brave new world of the government run economy! If the US economy were a filling station (in Oregon, where somebody pumps your gas) and Ben Bernanke and Hank Paulson were the gas pumpers, they'd be wearing green denim jackets with the slogan across the back, "Makin' the world safe for Big Business!"

Friends, for the next little while you are going to get volatility and yet more volatility, so put down that wastebasket, stop puking, and tighten your belt.

Yesterday the gold price staged its largest one day rise in history, US$70.10 up 11% and the silver price rose $1.15, then another 36 cents in the aftermarket, up 15%. Today gold rose 46.10, a number right up there with all-time big moves, with a range of US$93! (920.20 high to 827 low). Right now in the aftermarket they're trading US857.70 and $11.92. I have no doubt that we saw the silver and gold lows on Tuesday. But volatility hasn't ended yet.

The Nice Government Men needed not only to resuscitate stocks, they must also goose the dollar and slam silver and gold. They will launch an attack on silver and gold, and that right soon. It may, probably will, drive them down, but not for long. Why? Well, answer that with another question: why did gold rise US$70.10 in one day? Did anything happen around that time to send it running? Well, matter of fact, without benefit of congress or constitution, the Federal Reserve bank (a private corporation) and the US Treasury secretary nationalised AIG, taking a 79.9% ownership interest and fronting AIG $85 billion bucks. That, with the other bailouts -- Bear Stearns, Fannie, Freddie, Countryside, etc. -- proved to somebody that the NGM will inflate the dollar to bail out its buddies, & the rest of the country, and the dollar, be damned.

Cry, O, cry for what they have done, and what will come! You may hold on to value by holding silver and gold, but the misery will spread so wide and far that owning them will be a bittersweet pleasure.

Buy silver and gold. The NGM have plainly telegraphed what they will do: inflate the dollar to nothingness. Yes, volatility and turmoil will reign in the short term, but just keep your eyes on the long term: the dollar's death. Besides, ask yourself which you had rather hold, physical silver and gold in your hand, or bank deposits? Brokerage balances? US bonds? US dollars? Euros? To me, the answer is clear.

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

- Franklin Sanders, The Moneychanger

Buy Silver and Gold Coins at:

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 $3,130.00; silver's primary is up targeting 16:1 gold/silver ratio or $195.66; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold; US$ or US$-denominated assets, primary trend down; real estate in a bubble, primary trend way down.