Since nothing happened in most markets this week, I'll start off trying to explain why platinum shot up $76.90 and palladium $27.10 in the past two days. Supply & demand for both platinum & palladium is quirky. About 75% of platinum comes from politically unstable Southern Africa and about 75% of palladium comes from politically unpredictable Russia. Other 25% of platinum comes from Russia, and of palladium from southern Africa. A third or more of demand comes from auto catalyst use, so a bad year for auto manufacturers will be a bad year for platinum & palladium. On 16 August striking miners at the Rustenburg, South Africa mine of Lonmin threatened police with pistols, spears, & knives & the police opened fire, killing 34 & wounding 78. Strikers had already beaten to death two policemen and burned two mine security guards alive. Inevitably a gigantic political crisis results, & this was enough to send platinum's price rocketing. As a general rule, platinum costs more than gold. Go back 20 years, and you'll rarely find the Platinum/Gold spread (platinum divided by gold) below 1.00. Generally also, when platinum costs less than gold it will be a profitable idea to swap gold for platinum. From 2000 to 2008, platinum thrice reached more than 2.35 times gold. Since then, however, the ratio has been dropping. In August 2011 platinum dropped below gold. and has remained below gold since then. Hasn't done any thing like that since 1982 and 1985. So which comes first, the market set-up for a move, or the news that precipitates the move? Probably the set up, but I can't win by championing that notion, so I'll let it alone with the final word that if you have a LOT of gold, you might consider swapping a little bit for platinum. Don't go hog wild, just do a little. This week markets stayed flat as a fritter. Silver lost pennies, gold lost $3.40, stocks rose half a percent, and dollar index had a face as flat as a dog that chases parked cars. Lo! The dollar index went nowhere today, rising 23.7 basis points (0.30%) & giving up lots of that in the aftermarket. Dollar remains in tightly controlled 82.80 - 82.20 range. Natural as a bottle blonde. Today the euro lost most of what it gained necessary, giving back 0.19% to $1.2332 & lodged again against the 20 day moving average (1.2284). Yen kept on falling today, down another 0.27% to 125.68c (Y79.57). Now free falling below its 50 & 200 DMAs. More downside coming. Stocks, as I observed yesterday, are moving higher. People often rag me, complaining how wrong I am about stocks, how they've kept moving higher in the face of my denunciations. Frankly, if I do anything at all to keep y'all from buying stocks or convince y'all to sell them, I'll be doing you a huge favor. Stocks are in a primary down trend, a bear market, & trying to scrape off a little profit in a counter-trend move in a bear market is like juggling straight razors -- ain't no way you can win. Adjust stocks for inflation or measure their performance in gold or silver since 2001 & you'll see what I mean. Stay away from stocks, especially mutual funds, unless it is a very special situation. But right now stocks are headed higher. Dow ascended a less-than- lofty 25.09 (0.19%) today, S&P500 rose 2.65 (0.19%) to 1,418.16. Both indices will soon meet or slightly better their highs of this year, then they will fall off a cliff. I don't care whether the NGM can keep this anvil floating in the air until after the election, or it falls sooner, fall it will. SILVER & GOLD suffered a wretched week, until you look closer. Both ended down 0.2%, but place that against the attack they survived this week, and their bouncing back therefrom. Today gold gained 20 cents [sic] to end at $1,616.30 while silver lost 21 cents and ended 2799.5c. Gold ended Friday a week ago at $1,619.70, fell as low as $1,591 by Wednesday, but carved out a bottom and finished the week only $3.40 lower at $1,616.30. It's a subtle thing but all of August has been spent fighting off these attacks at successively higher levels. Next week gold will be tapping on $1,620. Only a close below $1,585 would pose any threat to gold's upward bias. Must clear $1,640 to break out upside. Sometime in gold's near future -- in September, or, if the NGM turn on the screws to keep gold low before the election, then in November -- lies a strong rally. The correction lies behind us, left in the rearview mirror like a string of Burma-Shave signs. Gold's future will happen at higher prices. Same holds true for silver. Silver started the week at 2806.2 & ended a few cents lower, but after a Wednesday low at 2750c climbed to a high at 2833 today. One bright dawn silver will cross 2860c & the shorts will run like Democrats escaping a Southern Baptist convention, or Republicans fleeing an AFL-CIO convention. So here we are, as a friend accused me this week, trying to look at a buffalo with a microscope. Folks, gold & silver are a BULL buffalo, & they are fixing to stampede. We had a fierce lightning storm last night that fried -- french-fried -- our telephone system. I got nearly to my office at the farm this morning and just as we were crossing the last creek on Robinson Branch, there lay a tree plumb across the road. Too big to move & me without a chainsaw. We have a gaudy lavender phone attached and are limping along, and full service will be restored Monday. I am lightninged out. Struck the transformer in front of my house last Saturday, and ruined our phone, satellite dish, well pump, & mood. Y'all might want to protect all those delicate electronics -- even your phones -- with a surge protector. On 17 August 1590 John White, leader of 117 English colonists who in 1587 had established a colony on Roanoke Island, North Carolina, returned to find the settlers vanished. No trace was ever found, but some speculate that the Melungeon people in East Tennessee who speak a sort of Elizabethan English, are descended from them. On 17 August 1863 Confederates skirmished with union troops at Calfkiller Creek near Sparta, Tennessee. Same day federal batteries & ships attacked Fort Sumter in Charleston Harbor, but failed again. Siege of Charleston lasted longer than any other in the history of North America, over 500 days. Last week I mentioned to y'all the Transformations & Renewals gathering that I am sponsoring with Catherine Austin Fitts of Solari.com. You can read all about it at http://transformationsgathering.com/. It's not for everybody. If you're looking for the world to collapse & plan on digging a hole and pulling it in after you, it's not for you. If you want to build the world that will REPLACE the failing one, it IS for you. We have no grand plan to remake the world or overthrow the existing system: it's doing that all by itself. However, Transformations is for those people who want to build a new economy, working from their own workbench in their own community. Go check it out. Y'all enjoy your weekend.
Argentum et aurum comparanda sunt —
Silver and gold must be bought.
— Franklin Sanders, The Moneychanger
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