I have posted the December Moneychanger at www.the-moneychanger.com for paid subscribers. At http://finance.yahoo.com/news/the-silver-rush-at-mf-global-.html you can read how the MF global bankruptcy trustee is picking the pockets of the victims/former customers who held Warehouse Receipts for physical silver & gold thru MF Global. First, get this clear in your mind. Until now a "Warehouse Receipt" has been a sacrosanct security, a receipt for stored physical gold and silver, that has never been repudiated, since memory runneth not to the contrary. Yet now MF Global & this bankruptcy trustee, have found a way to render WRs worthless. Apparently MF Global bought Incredible Shrinking Gold & Silver for its customers, since the trustee proposes dumping it all into a pool and paying only 72% of what's owed -- not physical gold or silver, mind you. So although the gold was supposed to be (1) wholly owned by the customer & segregated & (2) therefore not subject to MF Global's bankruptcy & (3) supposed to be held in physical form under bond, it ain't there. I offer this account as an example of why I have kept on telling y'all with excruciating regularity & consistency that YOU MUST TAKE PHYSICAL DELIVERY OF YOUR SILVER & GOLD. I have been warning for years that huge amounts of unbacked paper silver circulate, and that at some point in this bull market some large safekeeper of silver and gold will default, and will be discovered to have the equivalent of wooden bars painted silver & gold. Yes, yes, I know people point at me and snicker that I'm just a suspicious natural born fool from Tennessee, uncouth and unsophisticated in the wise ways of Wall Street. Indeed, that may be true, but MF Global didn't pick MY pocket. Folks, y'all can trust Wall Street. Y'all can trust the financial & banking establishment. Y'all can trust the US government & the Federal Reserve. Y'all can trust them to steal your money, your clothes, your peanut butter sandwich, and throw you out of a boat holding on to an anvil and poke fun at you as you sink. Trust me. I know 'em. I'm trying to get past the bearish pictures on the gold and silver charts & remind myself that foregone conclusions do not exist. Somebody is doing Legion's job talking down silver & gold when they've ensnared me. Now that both metals have bounced (Friday), we'll get a better idea of how bad this will be. But more later. STOCKS are now catching up with silver & gold. Dow today lost 100.13 (0.84%) to close at 11,766.26. S&P500 closed 1,205.35, down 14.31 (1.17%) and 5 scant points from crushing morale by dropping below 1200. Silver & gold's outlook may be fraught with pain, but at least after a while they will come back -- stocks won't. At least, in no span of time likely to do y'all any good. Despite the best efforts of the Nice Government Men & Central Bank Lackeys & Running Dogs (CBLARD), the US dollar index rose again today, up 11.4 basis points (0.15%), still hanging in above 80. Dollar is rallying, European crisis is driving it, it will go higher before this ends. That will make life difficult for silver & gold. Meanwhile the euro sank beneath 1.3000 again to 1.2995, down 0.41%. Gazing upon the euro, the move from 1.4247 in November down to 1.2945 last week, may be a fully completed move. If so, the euro will correct briefly, up to l.3200 or so, before it resumes its plunge toward the earth's core. The Japanese yen looks ready to move lower, but has established a support line over the last 1-1/2 months about 128c/Y100. Closed today at 128.15c/Y100 (Y78.03/$1), down .36%. Back to silver & gold. I can't get around this conclusion that the Big Cause right now is the European bank solvency crisis. It's huge, it's hungry, & it can't be fixed and ain't being fixed. When the panic begins, as it did in 2008, the drain sucks down everything in a heartbeat. And I will keep on saying this until y'all put your hands over your ears & run for cover: THIS IS NOT THE END OF SILVER & GOLD'S BULL MARKET. This is your opportunity to buy one last time at bargain basement prices. Wait a while if you please. Sure, all the wild numbers are possible, gold at $950 and silver at $16 -- POSSIBLE, but neither you nor I can read the future perfectly. Hence, we weigh possibilities and probabilities and make the best choice we can & trust God for the outcome. Here's what's happening right now. As long as silver holds 2600c and gold holds $1,535, no big drop is coming. Below those levels gold falls to $1,475 support & silver to 2000c. Today gold backed off to $1,594.40, giving back $1.20 but remaining above $1,590 (low struck at $1,585.80). On the other hand, gold was stopped at $1,607.40, so couldn't pierce that $,1,605 resistance. Why is the premium on US 90% silver coin rising? That generally only happens at bottoms, even at interim bottoms. But strengthened it has. Silver lost 79.3c and closed Comex at 2882.2c, a whopping 2.7% loss compared to gold's nothing change. Well, it's to be expected that silver in a correction will be weaker than gold. If that surprises you, you ought to go back to playing pinball machines, because you haven't yet understood this game. One thing that makes me suspect even my own bearishness is this: when everybody believes a market is going much lower, it won't. Nobody is left to sell it. But I am willing myself to be patient here & watch silver & gold unfold, & to watch every indicator very closely -- I have indicators y'all know not of -- for the least sign of a turnaround. Here's a sign of just how far communism has come: it now has hereditary rulers. North Korean dictator Kim Jong Il, son of North Korean dictator Kim Il Sung (d. 1994), will be succeeded by his 28 year old son, Kim Jong Eun. Sort of reminds you of the French Revolution ending in Napoleon's empire. (By the way, Kim Jong Eun's mama's name was Kim Mah Jong.) And, again to show that what goes around comes around, in 1828 South Carolina declared the right of states to nullify federal laws. They were just about 183 years early. By the way, in the stand off with Andrew Jackson over the tariff, South Carolina won. Jackson blinked.
Argentum et aurum comparanda sunt —
Silver and gold must be bought.
— Franklin Sanders, The Moneychanger
|
