Friday, March 03, 2006


Traders Look For $12 Silver

Market Watch has the end of the week numbers. "Silver futures closed at a fresh 22-year high Friday, up more than 4% for the week with the gains tied to expectations that an exchange-traded fund based on the metal will soon be launched. 'Conditions are set to remain volatile in silver for some time to come as traders await the SEC's decision on Barclay's ETF application,' said James Moore, an analyst in London."

"But'a positive outcome and subsequent launch is likely to generate plenty of upside with $12.50 remaining my price target,' he said. Lance Berg, a spokesman for Barclays Global Investors, said Friday he was unable to comment on the iShares Silver Trust, which is still subject to an SEC-imposed quiet period."

"Analysts said silver's rise may reflect buying on speculation the silver ETF would soon get the green light. Gold experienced a similar pop in the weeks leading up to the launch of StreetTracks Gold Trust 'The 130 million ounces of silver needed for the launch of securitized silver are not going to be easy to come by, nor will they leave much available for investors who have been just starting to chase after the white metal as soon as gold reached new highs,' according to Jon Nadler, an investment products analyst at bullion dealers"

"Meanwhile, gold for April delivery climbed as high as $571 an ounce, the highest Nymex level since Feb. 6, but the contract closed down $2.40 at $568. It's up 1.2% for the week, however, after closing last week at $561.20. 'Gold should find temporary resistance around $572 but a re-test of January's $575 high now appears imminent with resistance above now expected at $578/$582,' said Moore."

"Elsewhere in the metals sector, April platinum rose $7.70 to close at $1,062.50 an ounce, with platinum contracts finishing the week up 2.6%. The June palladium contract rose $5.45 an ounce to end at $308.45 an ounce, up almost $16 from the week-ago close."

"Key indexes that track the metals-mining sector closed lower Friday to mark losses for week, despite Thursday's gains of around 3%."

And Mineweb had this to report. "South Africa’s gold production in 2005, was its lowest since 1923, at 296.3 tons, according to a statement from South Africa’s Chamber of Mines released on Friday. The experts, after a strong rand forced restructuring and closure of a number of gold mines expected a figure near the 300-ton mark. In the fourth quarter of the year 74.1 tons were produced."

"'The good news was that on a quarter-on-quarter basis the December quarter’s gold production increased by 2.4% as the better economic environment and less work place disruptions enabled mining companies to increase output,' said the Chamber in the statement. The Chamber says that the higher average production cost of R89,130/kg compared to R85,200/kg in 2004, was reflective of the large restructuring costs that the industry had to make to right size various operations."

"Harmony Gold, the third largest producer of South African gold, fired as many as 13,000 workers in its restructuring exercise that began in April 2004."

If you have a weekend topic suggestion, please post it here.
1) Predictions!!! Especially post-ETF silver.

2) IAB impact on currencies.

3) Long bonds are finally moving.

4) JPY interest rates, yen carry trade, etc.

5) Ramifications of Dubai port issue.
Post Silver ETF!!
Which precious and/or base metal will bring biggest gains in near future?
My hinch is uranium or moly.
I agree Uranium is going to be huge. Do you think AG or AU will pop first? I'm hoping to move some profits into Uranium after that happens.
in the near future I think silver is going to pop with this new ETF.
Yeah, that $12.50 target might be conservative considering there will be a frenzy. I wouldn't be surprised if it hit that the day before SLV was launched.

There are a few items completely gone from APMEX's site. Cull silver coins, sterling silver, and they recently had a 90% silver coin sale for 0.10 less than spot. I think it only lasted a few hours before it was all gone. Their stock does fluctuate and some people have offloaded their collections. Check under 'wholesale lots' to see what I mean. It just seems the fluctuation is more so now.

I was surprised with the silver sterling they gave me. All but one piece was plated with 24k gold. That's pretty cool.
I'd like to pick up a thread someone brought up last week-how safe is it to buy and hold currencies and metals through other institutions? Which are the strongest or least vulnerable to bank failures or unexpected changes in market conditions? EverbanK? Gold, & others?
Read Dr. Edwin Vieira's artical if you have time. He knows more about U.S. monetary law than anyone I know of. The question of confiscation will crop up more and more through time. It's wise to plan ahead. Because it is different this time... :-)
Ben, Sorry to post this piece this way, I had trouble with the link.

The question is, do you think we will see gold pull back into the $520.00- $550.00 range? Or has that number been left behind, and $560.00 is now the floor? I do agree that gold will be over well $600.00 this year, I can find no reason to think otherwise. Higher inflation is going to happen, no way around it!

Money and Markets Saturday, March 4, 2006

Dear Subscriber,

This is a special edition of Money and Markets exclusively for our most loyal subscribers, because we want you to have this information before anyone else.

Indeed, I’ve been waiting years for this day.

With accelerated inflation now kicking in ... with major world conflicts now heating up ... and with gold up $26 an ounce just in the last two weeks ... I’m officially letting the cat out of the bag on my long-term, ultimate forecast for the yellow metal:

Before This Gold Bull Market
Is Over, the Yellow Metal Will
Exceed $2,000 Per Ounce

Why $2,000? One basic reason is that’s the level it will have to reach merely to duplicate the same purchasing power it had 26 years ago.

That was 1980, when, in terms of today’s dollars, gold reached $2,176.

And that was a time when the demand for gold was far less sustainable than it is today ... and the supplies far more abundant.

Is this really possible? You bet it is!

If history teaches us anything, it’s that no record stands forever on Wall Street. And when it comes to gold, everything I see tells me that day is coming sooner rather than later: I count no less than seven massive global economic forces — the tsunamis of the financial world — that are already making much, MUCH higher gold prices a virtual certainty.

Financial Tsunami #1
The U.S. Dollar Is Weakening
Around the Globe, Driving
Demand for Gold Sky High

Just six short years ago, the U.S. dollar was the strongest, most stable currency in the world.

But since 2001, the world’s confidence in the dollar has been shaken — badly. And with every passing day, more and more banks and investors are abandoning the greenback in favor of more stable stores of value — like gold.

The charts tell the story: Since the dollar’s demise began, gold has risen virtually nonstop.

Even when the dollar’s decline was temporarily interrupted in 2005, gold continued to climb, evidence that the dollar is only one of several powerful forces driving gold higher.

And now, as the dollar turns down again, gold is skyrocketing at an even faster pace. But as we’ll see in a moment, this gutting of the dollar’s value still has a long way to go.

Financial Tsunami #2
Exploding Federal Debt
Virtually Guarantees
Stronger Gold Prices Ahead!

Since taking office in 2001, the White House and Congress have transformed the U.S. budget surplus into a bottomless cesspool of embarrassing and unsustainable debt — and it’s getting more horrendous by the year: Last year’s $319 billion deficit was the third highest in history, and this year’s is exploding toward the $400 billion level!

All told, the national debt now stands at a mind-blowing $8.2 trillion — and explosive increases are virtually locked into the system until at least 2010. In fact, the only way to slow this debt disaster would be to enact drastic and painful economic measures no politician in his right mind would vote for.

Make no mistake: This mind-blowing debt — $108,000 for every family of four in the nation — can not be managed by simply selling more and more U.S. Treasuries to foreign investors.

There’s only one way Washington could possibly keep this mountain of debt from crushing the U.S. economy: Crank up the printing presses and flood the economy with paper money!

Now, you ... I ... and every foreign investor and central banker in the world know what that means: A flood of Fed “funny money” would send inflation soaring!

No wonder China’s central bankers have announced that they’re using some of their reserves to buy gold instead of dollars! No wonder millions of investors around the globe are shunning the U.S. dollar and turning to more stable things — like gold!

Financial Tsunami #3
The Ballooning Trade Deficit
Is Driving Foreign Investors
OUT of Dollars and Into Gold

When the trade deficit soars, it simply means that foreigners are taking in far more U.S. dollars from their exports to the U.S. than we earn from our exports to them.

Today, the trade deficit is a whopping 6.5% of the country’s GDP.

If that’s not a dead give-away that the dollar’s destined to continue collapsing — and that gold is destined to continue soaring — I don’t know what is.

It also means that foreigners who hold those hundreds of billions of dollars have a big decision to make: Should they:

A. Hold their profits exclusively in U.S. dollars which have been declining in value since 2001? Or, wouldn’t it be much smarter for them to ...

B. Dump dollars and diversify — put big chunks of their money into safer, more stable currencies and gold instead?

I ask you: What would you do?

The answer should be obvious: Diversify into gold. And that’s precisely what the world’s central bankers and savvy investors are doing.

Financial Tsunami #4
Despite What Washington Says,
Real U.S. Inflation Is Skyrocketing

Since 2001, gasoline is up 49%, beef is up 28%, eggs are up 34%, oranges and tomatoes are up 39% and 31%. The cost of buying a home has more than doubled. Health care costs and college tuitions have gone through the roof.

And yet, shameless officials at the U.S. Bureau of Labor Statistics continue to swear on a stack of bibles that inflation is “under control.”

How do they get away with that kind of gobbledygook? Simple: The government’s math is so convoluted it would make Enron’s crooked accountants blush in shame!

Did you know, for example, that if a product jumps in price but Washington decides the “quality” improved, they’re actually allowed to claim that the price fell?

And did you know that they totally ignore the surging cost of homes and condos, substituting instead the low cost of renting equivalent housing?

Then, they factor those artificially lower prices — the prices that nobody is actually paying — into the consumer price index, announcing that inflation is “under control.”

If you think — even for one moment — that inflation is really at just 3.4% a year, you’re kidding yourself. Your cost of living — the price you pay for everything from housing ... to food ... to fuel ... and to health care ... is skyrocketing by double digits!

And that’s important to know — because during the last officially recognized inflationary crisis (1974-1980) — before Washington began cooking the books on inflation — the average annual inflation rate was just 8% per year.

And during that period, gold prices rocketed more than ten fold from $58 to $612 an ounce — an increase of 1,055%!

Today, the true inflation is probably higher than 8%. But even if gold jumped only one quarter as much as it did in the 1970s, you’d still be looking at a gold price of more than $2,000 per ounce.

Financial Tsunami #5
Wars and Rumors of War
Are Triggering Huge
New Demand for Gold,
The Ultimate Crisis Hedge

Right now, the Middle East, the Persian Gulf and much of the planet is a powder keg on a short, short fuse:

Never-ending, escalating wars in Afghanistan and Iraq ... the first-ever election to power of a sworn terrorist group (Hamas) ... Iran’s defiant and arrogant program to build nuclear weapons ... anti-Western rioting throughout much of the Muslim world ... new terrorist attacks in Saudi Arabia ... Pakistan ... and India.

Unfortunately, not one of these hot spots is going away soon, and more are sure to arise in the months ahead. All this is terrible news for world security and the global economy — and news that can only drive up the value of gold.

Why? Because since the dawn of time, gold has been the ultimate crisis hedge for the world’s governments and investors. The more things heat up, the higher gold prices go.

Financial Tsunami #6
India and China Are Set to Take
Millions More Ounces of Gold
Off of the World Market

China has recently announced that it will plow at least 2.5% of its trade surplus into gold. That equates to a staggering $2.5 billion of brand-new demand for gold every year.

And let’s not forget the frenetic pace of economic growth in both China, and India, running at 9.8% and 8%, respectively. Both have only recently fully opened their domestic gold markets to private investors, and India is already among the world’s biggest buyers.

These cultures have a deeply ingrained, emotional affinity for the yellow metal, and a rapacious appetite limited only by their modest — yet rapidly rising — per-capita incomes.

Remember: Over one-third of the world’s population — more than 2.4 billion people — live in these two developing economic superpowers.

Watch for soaring central bank demand plus skyrocketing domestic consumption in the world’s two largest nations to add still another major boost to gold prices.

Financial Tsunami #7
Just When These Six Massive Forces
Are Creating Colossal New Demand for Gold,
Worldwide Supply of Gold is Dwindling

Even in normal times, you’d expect these six financial tsunamis to drive gold prices into the stratosphere. But these are not normal times.

The fact is, after thousands of years of mining every ounce of gold possible, the planet is beginning to run out. According to U.S. Geological Survey, there are now less than 45,000 metric tons of proven gold reserves left in the ground worldwide.

And that’s serious — because the above-ground supplies of gold couldn’t even begin to satisfy today’s exploding demand for the yellow metal. If all of the gold in the world were put in one place, it would fit comfortably in a high-school gymnasium!

Bottom line? No matter how you look at the supply and demand realities, only one conclusion makes any sense at all: I figure much, much higher gold prices are virtually guaranteed throughout 2006 and beyond.

I Repeat My Forecasts for Gold:

This year, you will see $618 gold, minimum. And odds are very high you will see gold as high as $740 this year. In 2007, I would not be surprised to see $1,000 gold.

And before this great gold bull market is over, you will likely see gold exceed $2,000.
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