As of today the spot price for silver has fallen to just above $10 and gold is down to about $745. These are the times that separate the men from the boys and the women from the girls. At times like this it is imperative to LOOK AT THE FUNDAMENTALS, so that you will not make the monumental mistake of selling your gold and silver when the price is low. Remember, “buy low, sell high” – not the opposite! The fundamentals for gold and silver (as discussed in my previous posts) have not changed!
THIS IS NOT THE END OF THE BULL MARKET FOR PRECIOUS METALS, BUT JUST THE BEGINNING OF THE NEXT PHASE. Don’t be shaken out of your position. Take advantage of this Golden Opportunity to add to your positions.
The recent pull backs in the commodities are the result of market manipulations. Like any manipulation, the effects will only be temporary. Here’s the proof: In the recent two months the naked short positions in silver held on the COMEX by investment banks has increased 5-fold, and the short positions for gold have increased 10-fold. A naked short position in the metals is when metals are sold that do not exist. A naked short position increases the supply of metals on paper only. An increase in supply – even an artificial one – depresses the price, according to the immutable law of supply and demand. In the real market there is currently a shortage of physical gold and silver due to worldwide demand as a result of these artificially low prices. Ask your local bullion dealer. Mine has informed me that he is currently out of gold coins, and if you want Silver Eagles you have to wait for weeks for delivery. It is the same all over the world, because people are taking advantage of these prices to take refuge from the dollar by stocking up on the metals.
At the present time there is a huge discrepancy between the paper markets for precious metals (and other commodities as well) and the real markets. But no such discrepancy can last for long, because the paper markets and the physical markets must eventually come into balance. When they do the prices will take off like a sky rocket and we will enter phase two of this bull market, which will take out the past highs.
So the Silver Lining is that, due to this manipulation (which happened by no coincidence just before the November elections in the U.S.) we are now presented with a fantastic Golden Opportunity, like no other that we have ever seen before, to buy the physical metals at bargain prices. My advice is to sell the farm, mortgage the house, do whatever you have to do to come up with as much cash as you can, and BUY AS MUCH OF THE PHYSICAL METALS AS YOU CAN, especially silver. Your favorite commodities are on sale at 50% off! Take advantage of it. Back up the trucks and load up!
In the most recent edition of the Financial Sense Newshour Jim Puplava discusses this topic in much further detail than I can go into here. I strongly recommend that you listen to the third hour broadcast for Sept. 6 which is available online. Here is a shortcut: http://www.netcastdaily.com/broadcast/fsn2008-0906-3a.asx