11 Aug 2011

Gold Breaks Free, Silver Remains Chained To The US Dollar

“Gold was the investment of the last decade and silver is going to be the investment of this decade.” -Eric Sprott

Few things in the investment world could match the frustrations of a Silver Bull.  The "investment of a lifetime" performs as if lifeless as it's Big Brother Gold answers the call to safety as the World's debt markets begin to collapse under their own weight, taking the fiat currencies that support them down the rat hole with them.

Silver may appear lifeless and adrift here as it teeters up on to the big stage...it is not.

There is no question that to be a Silver investor [let alone a trader] takes a cast iron stomach, and balls of steel.  We are right to be confused by Silver's lack of participation in the Global "Flight to Safety" that Gold is now experiencing.  But is that confusion justified?  Perhaps not.

It is now quickly becoming quite clear that Gold is decoupling from all fiat currencies, and much to Bumbling Ben Bernake's shock and awe, Gold is asserting itself as the Global currency of choice.  That's right Ben, you !#*!ing jackass, GOLD IS MONEY.  Confidence in the US Dollar, and ALL fiat currencies, is no longer simply waning...it is beginning to collapse.  And a "crisis of confidence" in fiat currency, and in particular the US Dollar, is all Gold needs to reach for "Infinity And Beyond".

Gold is no longer swayed by a "bid in the Dollar".  Gold no longer gives a damn about the Dollar, the Euro, or the Yen.  GOLD IS MONEY NOW.  And Big Money is now chasing Gold.

But the question is, what about Silver?

Here is what is holding Silver back...right now, but not for long.  The damn US Dollar.  Shocking, I know, but look at a chart of the US Dollar.  Despite teetering, the Dollar has remained firm and well bid since the announced debt-ceiling increase AND the debt downgrade.

You would be right to ask, "How can that be?"  Good question.

The stock markets did not react kindly to the debt ceiling increase, or the debt downgrade [and don't forget the horrendous GDP report on July 29].  The stock markets have for all intents and purposes, collapsed over the last eight trading days.  Historically, when stocks crash, investors sell-out and and hold cash.  They hold that cash in short-term US Treasuries. [Thus the rise in Treasury prices DESPITE the debt downgrade.]  Us Treasuries are bought with US Dollars.  This creates a demand for US Dollars thus putting an "artificial bid" under the Dollar.  Investors will sort out the cause of the crash "after" they are safely out of stocks and in cash.  Investors will stay parked in cash [Dollars] until they decide next where to put their cash to work for them in the financial markets. 

I hope that made sense.  This scenario in the markets: stocks to cash, cash to treasuries, occurs during most any upheaval in the stock markets...it is normal.  This is why the commodity market has been smashed along with stocks.  Commodities are bought with US Dollars the world over.  A strong Dollar results in weak commodity prices every time.  In many respects, this stock market crash was probably engineered by The Powers That Be specifically to crash the commodity markets, and convince the unsuspecting that Inflation has been contained.

Sadly, for Silver, it has been lumped in with all the other commodities.  It's monetary virtues ignored at this moment in time.  This misfortune is unlikely to last for long.

“To 250 million persons in 51 countries the word for money is the same as the word for silver and silver literally means money.”

-Silver Profits in the 80’s, by Jerome F. Smith and Barbara Kelly Smith, copyright © 1982, ERC Publishing Company, page 43.

Bumbling Ben Bernanke, by guaranteeing the Fed Funds Rate will remain at ZERO into mid 2013, has set in motion the collapse of the US Dollar.  The loss of confidence in the US Dollar that this announcemnt will bring very shortly, will eventually send Silver and all the other "commodities" soaring in a race to catch up with Gold.  It is only a matter of time.

And Silver has been marking time for the past seven years.  In the very near-term, Silver may "appear" lifeless and adrift as the backside of our financial hurricane finally comes ashore and exposes the weakness of all that was propped during the "eye of the storm" from Spring 2009 to Spring 2011.  The reality is that Silver is "right now" poised for a major move higher.  A move higher that may lead to the recognition that the US Dollar's day as the World's Reserve Currency are over.

The Big Picture in Silver tells us that a breach of the $50 barrier will signal the collapse of the US Dollar is imminent or in progress.  All efforts to keep Silver bottled up as EVERY other commodity on the planet has risen to new All-time highs have been to avoid the inevitable...the complete destruction of the global fiat currency system.

A move below 73.50 on the US Dollar Index will light the fuse on Silver.  A move below 72.75 on the US Dollar Index will launch Silver to levels only dreamed about, and forever be remembered as The Day The Dollar Died.

Silver will "nickel and dime" you to death if you stare at long enough.  It's time IS coming.  Patience, the US Dollars days are now numbered.  

The countdown on Silver has begun.

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