by Edgar J. Steele
June 8, 2006
Following is another installment of the impromptu blog I was posting on my site's main page while my list management and email sending capabilities were curtailed (in reverse chronological order) the past few weeks. This is beginning to be an easy way for me to make pithy market comments without going to the trouble of a full-blown broadcast column or rant. The only way to see these is to check into my site regularly.
June 8 - Maybe there's something to this 6/6/6 business. Silver really fell out of bed today, closing down 79 cents in NY, all the way to $11.19. A list member writes this morning that he believes the precious metals' price slide "...will continue, and I suggest that you inform your readers to sell GG and their metals and wait until GG goes back to $5-$6 and silver back to $5 and then buy back in. I highly recommend purchasing Puts, as I have reaped high profits in the last two weeks in the current stock market slide."
There, now you have heard from a point of view quite different from mine. Do your own due diligence and make your own decisions. Maybe this list member is right. If so, I would hate to have your losses on my conscience, in addition to my own. Notice that he agrees with me about the long-term metals bull, though, since he says to buy back in when the price gets much lower. Unlike him, I will not attempt to call the highs or the lows and I clearly do not believe in futures or derivatives of any sort. Nor should you borrow to buy market positions, which includes margin buying - buy it and hold it until it costs you sleep, then sell it until you are sleeping again. I believe in one thing: long term, gold and silver prices, especially, are going to the moon.
Call me foolish. Call me whatever you like. I ordered some more silver when it went hit $12 and I'm ordering still more if it hits $11. (God forbid it goes lower during this correction, but I will buy still more at each dollar point.) I shifted my PAL stock proceeds into the silver ETF (SLV) and will liquidate it for physical holdings as the US stock market declines, while moving from even GG into the ETF enroute to the bottom (but I'm not ready to do that just yet). The buckling of worldwide markets and the current US market slide make me want to get a little more secure and cause me to see the leverage inherent to metal stocks as less attractive.
Things are getting truly strange. I believe the dollar is being propped up artificially, and will succumb in a rush, with the artificially-depressed metals prices then following suit. I think this is the sucker decline, designed to get all weak sisters out of the metals market so that the big boys can cover their shorts and then go long. Those who try to time this market likely will be on the sidelines when the big upward move comes. Remember just how small these metals markets really are and just how responsive they are to manipulation. Notice that practically none of the base commodities are being hit like this. Gee, I wonder why? Of course, gold and silver could go all the way down to where the aforementioned list member said.
But, then, I also believe that history will show that WWIII and Depression II already have begun. Consider the source when you listen to my advice. (I still think the sky is falling, though...)
June 1 - The Sky is Falling...The Sky is Falling. Or am I just blue? Please increase my thorazine drip, nurse - I'm beginning to resemble a chart of PAL's stock price in recent weeks. Increasingly, it looks as though a worldwide stock market meltdown just might be in progress, one that the PPT desperately is trying to prevent here in America. Last call for equities...absolutely last call for those who haven't dumped all but metals, energy and other commodities. In fact, time to dump the weak sisters in that group: juniors, weak balance sheets...you know the type. Take your profits (or what should be small losses) now. Metal stocks have been on the decline along with metal prices, but I think that is market manipulation that must end. Problem is, with a market meltdown, only the strong metal companies will survive.
Gold was at about $500 at the end of 2005, touched $720 (up 44%) early this month and now is at $630 (up 26% on the year, so far, but down 13% from its recent high):
I think the time is approaching when we move into ETFs altogether. Should WWIII break out in earnest, a shift into physical metal will be in order. For now, dump all your weaklings and shift into either SLV or GLD. This morning I finally pulled the plug on North American Palladium (PAL), selling mine at market and shifting into SLV and GLD with the proceeds. Wish I had done it early this month when I told you to sell PAL, but got stymied by placing limit orders that PAL's price decline outran. Hope you did get out.
Here's a part of what well-known analyst Chris Laird had to say today:"I'm going to go out on a small limb and say we are looking right now at a gigantic world stock collapse. I don't like writing this, I get no fun out of writing gloomy financial analyses. It is still possible that these world market drops will be forestalled, but the end is nearing now for a world financial mania that started in Japan in the early 1990's with their ridiculous zero interest rates. As a matter of fact, the whole financial mania we are about to see collapse began in Japan in the 1980's when they created their own stock and real estate bubbles that collapsed in the early 1990's.
"Then the US had its financial and real estate bubbles in the late 1990's and early 2000's. Just as late as last year, the financial manias took hold in India, the Middle East and Korean and even emerging markets….and are now crashing as we speak.
"Now the flagship markets of the US and Japan are shuddering. The final gasp of a world financial mania is appearing before our eyes right now...
"There are two major forces that are propelling
gold upward. One is fear of financial market collapses that are appearing like
burned popcorn everywhere. The other is an imminent energy war in the Middle
East. Iran is the pretext. It does not help that their leader is a maniacal
Iranian mystic/politician that believes he is ushering in the end of 'history' -
his own words.
"So, we have a huge overhang over the world financial markets with the unwinding of the Yen carry trade. The over blown real estate markets that are now collapsing just like everyone feared world wide. The imminent dropping of the USD that is making world central banks very afraid that a lower USD will pull more liquidity out of the speculative bubble world stock markets. And fear of an energy war in the Middle East with Russia and China and Iran on one side, Israel right in the middle, and the US and its few allies on the other side.
"No wonder gold is up about 200 bucks this year, and is having no problem holding onto its 650$ range.
"I'm sure gold is going to go well over 700 quite soon now. Read my article about 'Huge Action and Earth Shaking Change Imminent.'"
Please tell me that I am waayyyyy past the point of having to remind you of priorities, all of which should already have been taken care of before you worry about market investments: Safety, Location, Food, Protection. Think Y2K on steroids and packing nukes...
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Copyright ©2006, Edgar J. Steele
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