As I am writing this, early Wednesday morning, silver is at $19.36 and gold is at $963. Oil is at $101. Get ready for higher energy prices! After testing the new $100 high – dropping below $90 over the past week or so – the oil price has now soared over $100 again is now sitting comfortably in the three digits, despite the recession. $100 will be the new support level and the price will soar upward from there due to increasing world demand, especially from China and India, and dwindling oil supplies (peak oil is no longer a theory but a fact in the eyes of most oil geologists.) We will not only be seeing MUCH higher gasoline prices in the future, but we will be facing gasoline rationing within the next two years or so. This, along with the falling dollar, will lead to worldwide recession and an eventual depression which will hit the U.S. much harder than any other nation.
Speaking of the dollar, I heard on the financial news this morning that the dollar broke through a major support level. The dollar index is now below .75. A Euro will now buy $1.51 U.S. This is a great time for Europeans to vacation in the U.S. They will just about be able to buy our country, but they will have to stand in line because the Chinese are busy doing just that, with all those paper dollars that we have been sending them over the years because of governmental policies encouraging Americans to consume, consume and consume rather than save, save and save. (Saving not only benefits the saver, but it also provides capital that is invested in the U.S. economy, rather than shipped abroad to buy foreign goods.) Our consumer society is now paying the price for our “live for the day, pay tomorrow” attitude – an attitude that our political leaders have encouraged, following the misguided Keynesian belief that it is consumption and not production that is best for the economy.
Our politicians have hollowed out our dollar just for their own personal short-term gain. When will Americans get the message, march on Washington, and tar and feather the whole bunch of them?
Getting back to precious metals: The recent soar in silver and gold prices means that a major corrective move or pull-back is in order. Two of the experts who spoke on Financial Sense Online this past week – experts who analyze price patterns – say that silver and gold are due for a huge corrective move to the downside. It is important to note that both of these experts are very bullish on gold and silver for the long term, but they believe that there could be a major short-term pull-back in the price before the next leg up. When this occurs it will be an excellent buying opportunity.
There is usually major resistance found at major round numbers (such as the $100 price level for oil.) I suspect that the $20 level will serve as a major round number resistance level for silver and $1,000 will be the next major round number resistance level for gold. I suspect that the prices will “test” these levels, and then make a “correction” and consolidate at a lower price before surging ahead again. In the next surge after the consolidation period metal prices will break cleanly through the next major round numbers. This is exactly what the price of oil did recently, as it broke through the $100 price level, then pulled back below $90 for about a week, and then cleanly took out the $100 mark again, which will now serve as a support level rather than a resistance level. (In a bull market, today’s resistance level will serve as tomorrow’s support level.) This is my speculation, but it fits in perfectly with the big pull-back predicted by the two experts I mentioned above.
The bottom line is this: If there is a huge pull-back in gold and silver prices, it could prove to be one of the best buying opportunities in this bull market so far. It will probably not last long, so you should be ready to act when it occurs. Once these next big round number resistance levels ($1000 for gold and $20 for silver) are cleanly broken and established as support levels, the prices of these metals could soar at a dizzying rate. That day is coming. The question is: Will this be the day?
Below is an a quote from a post that I made on Jan. 17 – just over one month ago. (Scroll down this page to see the post if you want to):
“Gold fell to $880 today. This is the expected pull-back I spoke of in my last post, and the BUYING OPPORTUNITY that I also spoke about! Silver fell slightly ending the day at about $16, following gold’s lead, as it almost always does, but still remaining strong.”
With silver well over $19 today, think of the money you would have made if you had bought it at my recommendation just one month ago when it was at $16! How many of these “buying opportunities” are you going to pass up?