Traders101 Stock Trading News Gold

Our studies of past gold buyer stock-markets have compelled us to warn stockmarket investors about the suddenness and sharpness of corrections that used to be possible to occur from time to time in gold and gold shares. As an example: in the 1970s gold optimist stockmarket when gold went up from $35 an ounce to $850 an ounce in 1980, there were said to be many scary and deep setbacks along the way, including a drop from a peak of $200 an ounce in 1975 to $103 an ounce in 1976. We have been anticipating the possibility of a violent correction such as the one we have seen this month since November. With the XAU index downwards 21. 9% and HUI Gold Bugs index downwards 24. 2% for the month, this correction bordered on a crash. Gold was downwards 9. 3% while silver was downwards 23. 7%, however, the facts that lead to our fundamental viewpoint that we are still in the early stages of an unprecedented gold and silver buyer stock-market are many.

The US USD and all world currencies have been losing value over a very long period of time, but since we totally de-linked from gold in 1971, the pace has accelerated. From 1787 to 1970 the US moulah supply incremented to 600 bill. Since 1971 the bucks supply ballooned to $6. half a dozen trillion to over $9 trillion, while mortgage debt is upwards 33%, and state and local feds borrowing is upward 30%. Anyone that claims we are not experiencing rampant inflation simply does not understand what inflation is. At the pace that M3 has grown since the beginning of the calendar year we should add virtually $1 trillion in 2004 alone.

Meanwhile, the supply of gold from the mine production has slipped over the past few years to less than 2600 metric tonnes, about equal with jewelry demand for gold. Hedge buybacks accounted for 310 metric tonnes in 2003. The really big change came from investment demand, that is the only true real driver of a true gold optimist market place. Investment demand has progressed from -47 metric tonnes in 2000, (the calendar year the internet bubble burst), to 156 metric tonnes in 2001, 456 metric tonnes in 2002, and 888 metric tonnes in 2003! Silver supply from mines and scrap has declined short of demand since 1989, with the deficit estimated to reach 46 large ones ounces this calendar year.

The recent action in the COMEX silver commods stock-market suggests that we are reaching an inflection point. Dealers in silver had shortfalls of over $300 big ones before crushing the charge ahead of the April expiration. Dealers have disappeared on the short side after escaping serious damage over the just released few calendar months. Trading insiders should learn from this episode to take delivery when speculating in silver as the equities trading rules of the COMEX are rigged in favor of the shorts. This speaks loudly to the commods City having little connection with the real physical stockmarket. It might take some time now for the City to recover from the technical damage that this has caused to the metals and the precious metals issues. 3% and 9. 9%, respectively, after exceeding 80% bullish in recent calendar months. One very good sign is the physical acquiring flooding in from China, Japan, and India in the face of the sharp drop.

Some additional pts for thought supporting the bullish fundamentals of gold and silver:

We are in a wartime environment - history supports the contention that war and ever-increasing military expenditures strain Washington budgets and result in even more rampant moulah printing and debt creation (inflation).

The Rothschilds have abrogated their privilege to fix the figure of gold in London, a privilege by some estimated to be worth a bill USD. Since their trade has largely been a facilitator of dumping forward, doesnt this suggest a drying upwards of dumping, that ought to logically result in their desire to acquire on the different side now as a buyer. Again, investment demand is the only true driver precious metal optimist stock-markets.

The association of gold and silver with the reflationary deal being over is ludicrous. The proponents of that theory had better pray that they are wrong; however, if in fact they are right, gold and silver might be in even more demand as safe havens, of that there are few other players. The lack of success Japan had with such an endeavor, (even though they used to be a country that will fall back on their high figure of savings, unlike the US) should still be fresh in our minds. While decades of expanionist bucks creation might eventually result in a deflationary bust, as too much debt is created to be serviced, the direction is still in force and its reversal ought to upset the worldwide economic technique, that is a key reason to maintain exposure to gold.

Chinas announcement to slow bank lending over a few days in order to slow what it characterized as too rapid evolution, was a trial balloon to gauge the marketplaces response to such an adjustment. The marketplace response must have struck terror into the hearts of central bankers worldwide. They doubtless concluded that reeling in the worlds bubble marketplace is not an future. The Fed is finally in a quandary over what to do. The rest of the worlds Wall St value is $15 trillion while the remainder of the world corporate certificate marketplace is an additional $13 trillion. There is no remaining instrument to settle the unwinding of the derivatives!

When the masses realize what has happened, they can run headlong to gold and silver and the institutions that produce them with such a fury may make the internet bubble look like a high yielding utility share by comparison. Do not be fooled again by Rothschilds retreat from the gold City.

Remember it was the Rothschilds that sent a messenger to London to start dumping notes when Napoleon was defeated in the 1800s, that caused a dumping panic as joe public believed Napoleon had won. Then the Rothschilds came in and scooped upward the entire debt as they are waiting to do with ones gold and silver. Gold and silver issues are our high-powered leveraged play on increasing gold and silver asking prices over the subsequent decade. We expect gold and silver to exceed the 1980 maximums of $850 and $50 per ounce in the subsequent few years. Before this gold and silver buyer stockmarket is through, we believe gold and silver may exceed the all-time peaks in real terms. Just be sure to stay aboard.
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