Monday, December 6, 2010

Metals Rally. Here's Why

Silver above $30/oz today; Gold up to as high as $1428. I am very sorry I have been right about these plays because they are screaming dysfunction in our dollar based world. Some profit taking may hit soon, but the long term UP trend remains intact. Beware any financial entity that poo poos metals. The metal bears have been wrong for 9 years.
There are some significant reasons why gold and silver are surging. Even when the shysters at the Chicago Merc raise the  margin requirements as they are apt to do for their friends who are short, demand from Asia swoops in to take advantage of weakness. There is no doubt that part of China's diversification away from the dollar is an effort to buy gold. Price weakness has even invited ample demand from U.S. buyers, in spite of every shill pronouncement that gold is dead when it goes lower.
The biggest elephant in the room is the specter of CME, COMEX meltdown. If the price of gold and silver were to be dramatically pushed lower by manipulative forces, a severe drop in price would be met with demand for the metals by the TON. This would cause a delivery catastrophe for the U.S. PM exchanges in New York and Chicago. These exchanges have got to be aware of their already dubious situations as open interest on the short side is well beyond the capability to delver. 
In all, these factors argue for no more than overbought selling at times, but no great DOOM opportunities to the downside. This is especially true when the outright survival of the PM exchanges is in question.  
IF you encounter a gold short spreading lies and propaganda, give him an extra kick in the shin for me. thanks. 


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JimK said...