Have you ever noticed that of late, the metals price sort of follows the stock market price?
Many wonder why, and there is a good reason. First of all, optimism springs eternal for devotees of the stock market. I think the stock market is on extremely shaky legs, but who knows for sure? One reason for this price following, is that when the stock market goes way down, thousands of people have stock positions and they are caught short with margin calls. They then must sell their metals to cover their margin calls.
Secondly, when metals go up rapidly, as is the case now, many people take their profits and sell. Foolish though it may be, still they think that a ’bird in the hand is better than one in the bush,’ or some such homily. When lots of people sell, the market has lots of gold and silver in it because of the sales. When it goes up as it has of late, many people wait for a pullback, so they don’t buy. Sales place metals in the market, and if people aren’t buying at the same rate, prices go down, because of excess sales and miniscule demand.
All prices are basically controlled by supply and demand. As I write this on Thursday afternoon, prices have slumped along with the Dow. Lots of people must have sold, and few are buying I can only assume, making the laws of supply and demand prove themselves. Why the sudden jump in prices, and will there be a pullback? As far as a ’correction,’ maybe, but I have no way of knowing. If I knew what prices were going to be tomorrow or even in the next hour, I would be so rich that I couldn’t count the money. No one has a crystal ball which will tell the future, even in the next minute. A year from now, I have no trouble predicting that prices may be as much as double what they are now, but I don’t KNOW this. Only speculation, based on what things look like now. I do know this. People around the world are getting really worried about dollars, stocks, oil, and conditions in general. Let’s suppose that a measly one tenth of one percent (probably a real high figure) own or know that gold and silver are protection and real money throughout known history. Suppose that number jumped to two tenths of one percent due to fears, catastrophe, upheaval, Muslims, or whatever. Gold would probably double overnight, or as fast as the new tenth of a percent could get their checkbooks out. Gold and silver are the most supreme security, and nothing can equal them as far as convenience, simplicity, historical worth, or ease of storing, buying and selling.
You figure. The buck slides to 75, the average P/E ratio for stocks is way too high, there is an actual $9 trillion budget deficit, with a $40 trillion long term debt, and it grows larger each minute. Can the United States of America, in any way, ever pay a $9 trillion debt? A $40 trillion debt? It is physically impossible for our debt to ever be repaid other than by printing dollars. Milk is over $5 a gallon now, and gas $3 a gallon, just to name a couple of things. On Friday morning, the Beeb (BBC) was interviewing people at the Silver Spring Md. train station, and 100% of them were worried about the economy, their pay not keeping up with prices increases, and the falling dollar. At a deli, the manager said his cheese has gone from $1.60 to $2.80 per pound, he can’t raise his prices that much, and he is in trouble. Will prices go down as long as the dollar presses are running night and day? Nope. Will gold and silver ever go back to $300 or $6? Nope, unless alchemy is invented. If someone could be a successful alchemist, and turn base metals into gold, the price of gold would go way way down, although synthetic diamonds haven’t driven down the price of real diamonds.
The future looks pretty glum to me, but I hope I am wrong. As signs of our times, an increasing number of Americans are removing their dollars from banks and stocks and buying gold and silver, at least from me. I am certain that busy phone lines are frustrating to many of you who wish to get in contact with me. So, I have solved the problem, at least as much as I can. My son David is going into partnership with me from his home in Wisconsin. He will serve you, just as I do, in a friendly, honest way, using the same web site prices. He already has his ’888’ number, and his business cards, order forms, etc are ordered. He is coming to visit me for a few days to get the hang of it, and should be up and on line the day after Thanksgiving. Maybe a lot of you would rather deal with a 42 year, old rather than a 73 year old? At any rate, there will then be three phones to serve you, rather than the current two, and if needs be, he can get a second one, which would make four. His number will be on the web site as soon as he is up and operating. He has twins, a lovely wife of many years, and unfortunately, he even looks like me. Now I can take a vacation without taking a cell phone with me and inconveniencing you guys. I intend to do that too. He also can do the same, and I’ll take care of his people. Works out fine.
A long time client of mine is worried about his bank going down. I asked him if the FDIC wouldn’t pay him, and he said that if his bank went bust, (a large chain of banks with hundreds of locations), his research has shown that it might take years for him to get his dollars, because of various requirements of the bankruptcy act. He therefore took his dollars out and bought a lot of Krugerrands. Why not? Why hold paper dollars, which are sinking like the Titanic? We measure our wealth in dollars, and that measurement is failing. Get out, as the John Birchers correctly say about the UN. Also, have a great weekend!