Wednesday, October 08, 2008

The Door Into Physical Silver and Gold is Very Small, and Won't Accommodate Panicked Crowds

Gold Price Close Today : 903.10
Change: 24.70 or 2.8%

Silver Price Close Today : 11.717
Change: 39.2 cents or 3.5%

US Dollar Index Today: 80.82
Change: -0.22 or -0.3%

This office feels like a war zone. How can you sell or buy physical silver and gold when you can't even trust the spot gold and silver prices you see on a screen? People promise they can ship, then, through no fault of their own, can't. Customers who've ordered are nervous (not to mention me) and some who haven't ordered seem just to give up. Nerves are frayed throughout the physical metals market, not just ours.

In a stable, slow moving market, it makes sense to buy the lowest priced item relative to spot gold or silver prices, because over time in a bull market, premium always disappears. However, this market left off normality two months ago. Premiums may be sky high, but it's time to consider them from the standpoint of absolute price. Premiums may be high, but prices as a whole are low now compared to a year from now. It all boils down to this: if you want to play, you got to pay.

And you can't be picky about what you get. I've sold things in the last week I have seldom sold in the last 28 years, such as thousand ounce silver bars or non-Comex approved silver bars, but those were the only silver that I could get shipped within a week or two. If you want to play, you got to pay.

Most of all, be wary of charlatans who promise the impossible. They won't be able to perform. And always remember that if a deal sounds too good to be true, it is. These outrageous market conditions will continue unchanged until the silver price climbs over $15 - $17 or higher, and the gold price climbs over $940. Even then, high premiums may be the rule for quite some time.

Today the gold price rose US$24.70 to US$903.10; the silver price jumped 39.2 cents to $11.717.

STOCKS continued to drop today, down another 126 points to close at 9,321. Dollar kept dropping, too, to 80.818, down 22 basis points.

The gold price has now reached its last high around $905. Brace yourself -- and keep braced -- for any sudden drops in gold. Volatility rules, but the trend is up. If gold makes it through $905 on this try, next barrier is $928. The big test comes, however, at the July high, US$977. Once the gold price passes US$977, it will blow the ears off everybody watching.

Expect the silver price to keep lagging as fear of systemic financial crisis drives market psychology. Does that make me want to crawl into a hole because I have for so long recommended buying more silver than gold, or even swapping gold for silver? Not at all, because as time passes the silver price will catch up and outpace gold, at which point we wills swap silver for gold and wind up with far more ounces of gold that we would have, had we bought gold rather than silver in the first place.

Buy silver and gold. Buy whatever form you can get fastest delivery on, buy on delayed delivery if you can't get fast delivery, but buy. The door into physical silver and gold is very small, and won't accommodate panicked crowds. As fierce as this buying panic has been, it will pale next to the panic that will break out when the public realises they've been had, and the US dollar has been sacrificed to save the banks.

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 $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.