As I am writing this early Monday morning, before the opening of the stock market, I am watching CNBC’s financial network. It is funny to see how the Fed (and the markets) are panicking right now. Today the DOW futures is down 500 points (in response to yesterday’s huge decline in the European and other markets), and they know that when the stock market opens today there is going to be a crash if they don’t do something right now. So the Fed just announced a three quarters point “emergency” cut in the interest rates (to 3.5%.) This is HUGE! (The recent cuts have been half a point. This is the first 3/4 point cut since 1984.) Also, at the same time that this occurred, Henry Paulson, the Secretary of the Treasury, was on the network LIVE talking about the new 150 billion dollar “stimulus package” and how it is going to be “swift” and “broad based.” (They actually interrupted Paulson’s live speech to make this emergency interest cut announcement!) This all occurred between 7:00 and 7:20 AM CT, before the stock market open, which again demonstrates that they are in panic mode. (They are predicting another.25 to .50 cut when the Fed meets next week.)
This will definitely provide a shot in the arm for the stock market today, but it is likely to be temporary. Jim Puplava is predicting a very bad first quarter in 2008 (which we are experiencing now), followed by two good quarters in the middle of the year (due to all this excess liquidity (money creation) and these stimulants) followed by a very bad last quarter in 2008 (from a recession to an eventual depression.) So even if things begin to look better into the year, this doesn’t mean that we will be over the hard times. It is just beginning.
What is gold and silver doing now? Predictably, today, they have pulled back quite a bit, as the large investors are liquidating some of their profitable plays, in order to cover their margin losses. This is at the same time that the metals were already “correcting” for some of their recent huge advances. What this represents right now is a good buying opportunity, right before the next advance in the metals, which will be soaring! (Since the aforementioned events this morning, gold and silver prices have already reversed, recovering some of their recent loses, and are on the way up again, but not yet at their recent highs!)
Yesterday, I was at an estate sale, and as I was looking at a silver coin, a dealer of an antique shop, who was watching me, said, “Everyone is looking for sterling now. People are coming into my shop every day asking for sterling!” All indications are that we are getting closer and closer to the precious metals panic spike! Gold will be in the thousands, and silver will be $50 or more. (I still think, as does Jim Puplava, that silver will outperform gold.)
The stock market opens in 20 minutes. It is going to be a wild opening. We are living in very interesting times. Got Silver?