Friday, December 24, 2010

Silver and Gold Price Heavily Undervalued, How Far Can They Rise?

Gold Price Close Today : 1,380.00
Gold Price Close 17-Dec : 1,378.60
Change : 1.40 or 0.1%

Silver Price Close Today : 2931
Silver Price Close 17-Dec : 2911.3
Change : 19.70 or 0.7%

Gold Silver Ratio Today : 47.08
Gold Silver Ratio 17-Dec : 47.35
Change : -0.27 or -0.6%

Silver Gold Ratio : 0.02124
Silver Gold Ratio 17-Dec : 0.02112
Change : 0.00012 or 0.6%

Dow in Gold Dollars : $ 173.37
Dow in Gold Dollars 17-Dec : $ 172.32
Change : $ 1.05 or 0.6%

Dow in Gold Ounces : 8.387
Dow in Gold Ounces 17-Dec : 8.336
Change : 0.05 or 0.6%

Dow in Silver Ounces : 394.86
Dow in Silver Ounces 17-Dec : 394.73
Change : 0.13 or 0.0%

Dow Industrial : 11,573.49
Dow Industrial 17-Dec : 11,491.91
Change : 81.58 or 0.7%

S&P 500 : 1,256.77
S&P 500 17-Dec : 1,243.91
Change : 12.86 or 1.0%

US Dollar Index : 80.490
US Dollar Index 17-Dec : 80.360
Change : 0.13 or 0.2%

Platinum Price Close Today : 1,714.60
Platinum Price Close 17-Dec : 1,704.00
Change : 10.60 or 0.6%

Palladium Price Close Today : 754.10
Palladium Price Close 17-Dec : 741.85
Change : 12.25 or 1.7%

Sorry that I missed sending y'all a commentary yesterday evening. I simply ran out of daylight, and had a supper engagement I dared not miss. My wife would have thrashed me with briers had I been late.

My ever-vigilant friend and ready critic CR wrote -- not steamily but emphatically -- to rebuke me for writing that the government and central bank price suppression scheme was not working.

I take the rebuke, and make my apologetic correction. I was looking at the short term when I said the scheme to suppress the SILVER PRICE and the GOLD PRICE was not working. While techincally that is true -- prices are rising in spite of all their manipulations -- we don't know how much faster they might have risen had markets not been manipulated, or might be rising now absent the manipulation.

We only know that the suppression is not working. Again, while that might be technically true, it might be efficient enough for the manipulators' purposes. Having tortured myself by reading tedious pounds of their turgid writing -- pick up Foreign Affairs some time -- I have come to understand that from their standpoint, it is enough to win at the end of the day. They really don't concern themselves with silly worries like "the dollar's ultimate demise if inflation continues." They win if they get to 5:00 p.m. without the world exploding. Thus if they can keep silver and from running wild and scaring the populace out of their fiat private money, they have won for the day. To stop a panic, they need only stop it today. As Keynes famously said, sneering at the necessity of long term thinking, "In the long run we're all dead." For them, victory in the short run is victory.

But CR was even more correct from a long term standpoint. When the banking cartel conspiracy -- and doubt not that when any group of men plots to seize control of the monetary system and the economy to loot it systematically, that IS a conspiracy, and that did happen and continues daily -- they had to drive public money -- silver and gold -- out of circulation and replace it with their private money. The arrogant gall of this, overturning the right and practice of all human history, steals one's breath. Yet have they so well succeeded that in this world not a single country can be found where silver and gold are in daily use as money.

More than that, they have effected a collossal depression of silver and gold prices. Dig into history, look for prices and wages, and the numbers are so low you cannot grasp them. Here is a single example.

In 1850 the master of the lighthouse at Hunting Island, South Carolina, earned $500 a year. He had charge of the island, three families, and all the installation and buildings. Let's guess that job today would bring $80,000 a year.

At that time $500 equalled 24.1875 oz. of gold, but today at $1,400 an ounce, that lighthouse master's yearly salary would equal only $33,852, less than half what we would expect.

Silver's undervaluation is even worse. $500 then equalled 386.7 oz. At $30 an ounce, the master's salary was worth only $11,601 today, about an eighth of what we expect.

See how undervalued the SILVER PRICE and the GOLD PRICE is? How far down the conspiracy has depressed their value by diluting the world's money supply with their private fiat money? Right now the market is re-adjusting silver and gold upward, and remember: markets always overshoot, so from this extreme undervaluation, before this bull market ends, both silver and gold will reach extreme overvaluation.

And that's all I've got to say about that.

Yesterday silver, gold, and the US dollar all dropped. Stocks were mixed, with the Dow up slightly while all other indices fell slightly. (Prices above are for 23 December, not today.)

What does it mean? Technically, not much, because it most likely arises from traders pulling out of the market ahead of the Christmas holiday, taking off positions so they won't have to worry about them over the long weekend. Remember, governments love to throw surprise parties over long weekends. You'll begin to get some idea of where markets are headed next week, but even that may be deceiving. When the big cats are away, the little mice on the trading floor like to play, running markets up and down to reap some day-trading profits. It's activity meaningless to the longer term.

Notice at least on the scoreboard above that silver and gold and the dollar advanced over the last week. That's an uptrend, even with the metals' little fall yesterday.

Unless silver and gold pull some remarkable trick on Monday, I won't send a commentary, but will resume on Tuesday, 28 December. For this Christmas, set aside sorrow and mourning and fear, and rejoice in a blessed and merry Christmas!

Y'all enjoy your weekend.

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

- Franklin Sanders, The Moneychanger

© 2010, The Moneychanger. May not be republished in any form, including electronically, without our express permission.

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. Whenever I write "Stay out of stocks" readers inevitably ask, "Do you mean precious metals mining stocks, too?" No, I don't.