Thursday, October 09, 2008

If Ever a Weekend Offered Fair Promise for Declaring a Bank Holiday, it's this One

Gold Price Close Today : 883.10
Change: -20.0 or -2.2%

Silver Price Close Today : 11.820
Change: 10.3 cents or 0.9%

US Dollar Index Today: 81.40
Change: 1.22 or 1.5%

Confusion and shame-of-face run wild as bad news stories pour in too fast to digest them all: US Fed lowers interest rates, followed by Europeans, then South Korea, Hong Kong, and Taiwan. Icelandic government nationalizes the nation's biggest Lender. US government rumbles about buying "stakes" (read: "nationalizing") banks. Stock markets crash around the world while Japanese yen drops 2.5%, G7 finance ministers and central bank "heads" meet tomorrow in Washington for 2 days.

That enough excitement for y'all?

Today the US DOLLAR INDEX reversed course, jumping up 122 basis points to close at 81.40. Next move will probably be up as international financial panic sends people running to dollars for safety. Wow. Think about that -- but not for long, unless you want to go crazy.

Dow Jones Industrial Average closed down 678.91 at 8,579.19, having plunged through every support level except the 9 Oct. 02 low at 7,286. Now y'all see why I wanted y'all to sell stocks. Now at some point this crash will reverse, and sharply, for at least a bounce.

If ever a weekend offered fair promise for declaring a bank holiday, it's this one. First, the G7 finance "ministers" are meeting in Washington, no doubt to talk about "restructuring the international financial architecture", which our masters have long longed to do. Second, it's a long holiday weekend, and the yankee government always likes to throw its surprise parties on weekends, when nobody can do anything to protect himself. Third, they haven't staunched the bleeding in the system yet. Listen, I am not predicting they'll declare a bank holiday, but it's a possibility, so pick up some extra cash tomorrow, like, a couple of month's living expenses.

STOCKS have been worse devastated in terms of silver and gold than they have in dollar terms. The Dow in Gold Dollars (DiG$) five days ago stood above the last (G$235) low at G$257.50 (14.457 oz). Today it closed at G$200.82 (10.321 oz), down 22% in 5 days. In fact, in the aftermarket the DiG$ stands at G$194.69 (9.418 oz). Dow in Silver has fallen to 700.91 oz., a new low.

were another play in impossibility today. Gold actually closed down 20 at $883.10 on the Comex futures market, and the silver price closed up 10.30 at $11.82. Hogwash, I don't believe those prices any longer. In the aftermarket as stocks melted like Christmas candles too close to the roaring fire, silver and gold relentlessly climbed, at one point reaching $928 and $12.80 [sic]. So, what's the real price? Blamed if I know. It's whatever a willing buyer and a willing seller agree on, and it's moving ever higher.

Deliveries on silver and gold continue to stretch out. I was able to buy a few gold French 20 francs today at a modest $19 each over melt, if I don't mind waiting two weeks for them to fly from Europe. Believe it or not, those looked like a fancy bargain, compared to waiting 4 - 16 weeks for everything else.

Worst thing I see now is people locking up, unable to make a decision and move. Time for that is over. You better get out of stocks and anything that pays dollar -- annuities, certificates of deposit, bank deposits, bonds -- as quick as you can, get into silver and gold, and never look back.

I understand how easily our hearts faint and panic in a sea of bad news, but my own was quieted this morning by Psalm 46:

"God is our hope & strength, a very present help in trouble.
"Therefore we will not fear, though the earth be moved,
"and though the hills be carried into the midst of the sea:
"Though the waters thereof rage & swell, &
"though the mountains shake at the tempest of the same."

Tomorrow our office will be closed to give us a chance to untangle paperwork. Monday, 13 October, is a holiday, Columbus Day, and markets will be closed. We will return to the office on Tuesday, October 14.

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.