Gold and Silver Opportunity July 2011

8/6/2019 Gold and Silver Opportunity July 2011

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Every few years, a tremendous opportunity arises. The autumn months of 2007 and

the autumn months of 2008 offered such an opportunity to buy silver. That $11silver price is long gone. Many smart folks seized it. Whatever can be said on suchsilver platters applies almost equally to gold. The silver sprint gains are typicallymuch larger than the gold steady gains. The coming autumn months will feature agaggle of supposed financial analyst experts backpeddling in their hasty damagecontrol. They have been broadcasting a wide assortment of low level propaganda

posing as competent analysis, as they attempt to make the point that the anti-USDollar trade is done, the gold trade is over, the silver trade is spent. They are sowrong. A comedy of clumsy oafs and dolts on the Wall Street payroll awaits the

public in a grand chapter on stage. They will struggle to explain the move in silverover $50 on its way to $80 per ounce. They will struggle to explain the move ingold over $1600 and then $1700 per ounce. The mainstream news has been deeplyinvolved in a delicate balancing act. They must report the news, but it is almost allvery bullish for the precious metals. A new financial mini-disaster unfolds almostevery week. Last two weeks were Greece. The next week might be Portugal. Theymust report the news, but it paints a picture of a broken monetary system withdebased currencies. They must report the news, but it openly provides the gory

blow by blow details of ruined sovereign debt. The United States debt situation isGreece times one hundred.

This week, the loquacious jackass will permit some lovely pictures to tell the story.Three graphs adequately tell of a grand opportunity to latch onto the powerful GoldTrain with a super-charged Silver Scout. Who were the smart buyers back inSeptember of 2007? The false phony deceptive mainstream message then was thatthe subprime mortgage problem was contained. That was the first major stumbling

block by the hapless witless clueless USFed Chairman Bernanke. He has made not


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a single correct economic or financial system analytic call. Who were the smartbuyers back in October of 2008? The false phony deceptive mainstream messagethen was that a TARP solution was being put in place to save the US bankingsystem. The solution turned out to be basic largesse to the big US banks, enabling

purchase of preferred shares, enabling outsized executive bonuses, and enablingsecretive bailouts of banks across the globe. Without the Financial AccountingStandards Board allowance for insolvent banks to continue to dictate the value oftheir own balance sheets, otherwise known as systemic accounting fraud, the bigUS banks would have been liquidated. The entire Too Big To Fail principle isactually a battle cry to avoid solutions, to protect the banking elite that was

mostly responsible for multiple $trillion bond fraud and mortgage fraud.Without any reservation, it can be said that TBTF means No Solution, no remedy,no recovery, and no attempt at anything remotely resembling a road to economicrecovery. In my view, TBTF is the epitaph on the USEconomy and the nameplate

on the USTreasury Bond default. So who were the dummies who ignored theopportunity to buy gold and especially silver in September 2007 and October2008? The majority of them listened and trusted the mainstream news, the WallStreet misdirection, and all their fallacious messages.

THE COMMITMENT OF TRADERS SIGNAL

A big hat tip to internet contributor RG, whose message was relayed by the MidasReport. Consider verbatim his message, in which he gleefully proclaims to becalling all Rocketeers of the Happy Silver Ship. The goodfellow RG wrote, "The

latest Commitment of Traders Report for silver is now screaming out at full volumeBUY BUY BUY. In fact, the Commercial Short-Long Ratio that I have already

bored you with at great length in recent correspondence is now down at a multi-year super extreme of 1.79. Below is an up-to-date chart of the COT picture. In

summary there have only been four other weeks in this whole bull cycle where the

ratio has dropped below 1.80, four weeks. The first two weeks of these was the

28th August 2007 and the following week of the 4th September 2007. The secondtranche was the 21st October 2008 and the following week 28th October 2008.If

you study below both the chart of silver over that period and also the HUI gold

mining index, you can see how these extreme lows below 1.80 in the ratiocoincided on both occasions very markedly with a bottom in both the silver price

and the mining index. On each occasion this proved to be a multi-year

opportunity to take positions in both the metal and the precious metal miningstocks. Each time the price of silver rose by some 60% to 90% within a six monthperiod! And the HUI index rose some 90% to 160%. Folks, there is no such thing

as a risk-free trade. There is no such thing as a free lunch. And there is no such


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thing as a one-way bet. However, there are certain times in an investment cyclewhen an outstanding opportunity presents itself and advantage should be taken.

The evidence above shows very clearly the historic correlation between an extremelow below 1.80 on the Commercial Short-Long Ratio and a multi-month bottoming

in the price of both silver and the precious metal mining stocks. I have beentrading the precious metal sector since 2003 and I would consider this to be one of

perhaps four of the most suitable buying opportunities within the last eightyears!"The man RG makes a compelling argument, without providing thebackground factors that push the gold & silver prices upward. He simply points outthe COT signal and the resulting performance after two significant lows wereregistered in precious metals prices. Very convincing inded. Thanks to RG also forthe fine chart.

Note the green arrow in September 2007, a strong signal when silver was at a$12/oz price. Note the green arrow in October 2008, a strong signal when silverwas just above the $9/oz price. The same type of signal is identified with yetanother strong signal here & now in July 2011 with silver price at $35-36/oz. Itis ready for the next big upleg. This time gold might lead, but as usual silver willfollow and run fast and hard making yet more breathtaking gains. The greatspringtime consolidation is over. The power merchants have spent their


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ammunition with no lasting reversals, only pause with consolidation. They mustmanage unending financial crisis without motive toward remedy or solution. Theclimb has begun. Eager investors have waited and will wait no longer. The Chinesehave already begun to re-enter the gold & silver markets armed and loaded with a$3 trillion war chest. Hong Kong exchanges await the precious metals trade.Lawsuits against the tainted SLV and GLD funds are in progress. A little more

backfilling might be required. The fundamentals are incredibly powerful andbullish for both precious metals. The global monetary and sovereign debt situationis in ruins, crumbling more with each passing month. If corrupt henchmen are notin charge, then clowns and charlatans are at the USGovt, its finance ministries, theUSFed itself, the many regulatory bodies, and so much more.

PAST SIGNAL PERFORMANCE

Consider the silver price move from the two points in the past. The move up by50% in six months to March 2008 was interrupted by the Wall Street meltdown,followed by the insolvent collapse of the US banking system. Those who boughtall the way down from $20 to the bargain price of $9.5 were amply rewarded. Thekey was to avoid leverage, paper contracts, and the mainstream nonsense spouteddaily with errant focus and deceptive view. The sudden banking system insolvencyin 2008 was followed by grand orchestrated attacks on the entire anti-USDollartrade. Hardly a hedge fund was not attacked by their own creditors and brokers onWall Street, incredibly desperate to stay afloat. They found relief in white pixiedust. The US banks collapsed but did not suffer failure. Instead, with FASB aid,

coupled with TARP confiscated funds, they continue to limp along as GrandZombies. The silver price gain since October 2008 has been on the order of 4-fold,almost 300%. This is a stunning gain. The same will be said when silver surpassesthe $100 price level. The ruin of major currencies in falsely posed money forms,the parade of USGovt debt, the hapless unfixable condition of the USEconomy, thesubmerged US households, and the US banks suffering from shadow homeinventory coupled with investor lawsuit marred by defiant default in legalchallenge, these over-arching factors assure much greater ruin of money. Theyassure a march to $100 silver. Many naysayers will be silent a year from now.


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Ditto for the gold price moves, but the size of the gains are much less. The shape ofthe chart is very similar though. The springtime correction was not as great, but thegold gain was only half the silver gain. The crumbling global monetary system isthe primary push factor for gold, not price inflation. The quality and substance of

money is under scrutiny and question. In the next year or more, the price inflationfactor will be put more in the forefront. Investors and households will be forced toseek out true inflation hedges, if not hedges against personal ruin.


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FACTORS IN VIEW & ON HORIZON

The future holds many crucial factors to be extremely important. The Greek Govtdebt bandaid will prove again to be pathetic and useless, buying a little time, whileit aids the big European banks in toxic asset redemption. The bag holder is theEuro Central Bank, going down the tubes with its outsized Southern European

sovereign debt and deep losses. The debt contagion will spread to Portugal next,then Spain and Italy. Those two large nations, spared the shame and focus up untilnow, will deliver two lethal deadly blows in the near future. When these two largecolumns fall on the European bank offices, the Germans will finally announce theirexit plan. The Euro Central Bank just hiked interest rates by 25 basis points to1.5% in defiance of the USFed. My Jackass forecast made in early 2009 was thatthe USFed would be dead last in hiking rates, and that call seems correct. The bigUS banks have troubles in court. They actually believe a mere $8.5 billion can

permit them to walk away from well over $1 trillion in bond fraud. They want

bond fraud and mortgage contract fraud forgiveness with limits on restitution andpenalties. Their executives in New York City and London still enjoy $200 lunches.Not a single settlement deal will stick, not when investors and individuals arewinning every single court challenge against the banks. The municipal bond andauction bond fraud deals will follow. The budget battle within the chambers of theUSGovt has exposed the polarization, corruption, ineptitude, lack of leadership,and inability to avoid the catastrophe. It is simply too broken to fix. Taxes cannot


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be raised due to economic fragility. Entitlements cannot be cut due to public outcryand dependence. War cannot end since too profitable to the syndicate. Deficits will

pile up regardless of any accords. Whatever progress is made will serve as tinydown payment for a bigger problem just a few months ahead. The next news itemto anticipate is flirtation with USTreasury auction failures, against a backdrop ofabsconded USGovt worker pension funds. It is no wonder Treasury Secy Geithnerwants to leave town. The next QE initiative will come in response to an auctionfailure, as buyers have vanished and primary bond dealers are under extremedistress. The lousy auctions last week were the telling indicator, largely ignored bythe blind in the madding crowds. The US states are falling like flies in the summerheat, trapped inside window frames. Their extraordinary measures to avoid defaulthave become almost a tragic comedy. Talk has come of splitting California intotwo states, of silicon and latin stripes. Illinois and New Jersey are basket cases.Wisconsin is a war zone.

The USEconomy sputters down the hill over the cliff with lost brake systems andno functioning engine. The industrial base has been forfeited in its core. Legitimateincome was replaced by debt which defaulted. Then lastly consider the assault onglobal crude oil supply, the silly futile release from strategic petroleum reserves,following the Gulf of Mexico shutdown. The elite want $150 crude oil. The oilrelease effect has been forgotten already in just two weeks. With all the positivefactors toward gold & silver, by the middle of next year in 2012, one must wonderwhat motivated people not to invest in precious metals after seeing the strong COTsignal once more. The smart ones among us have learned long ago to ignore theWall Street sell side artisans, to ignore the USGovt wrecking ball managers, toignore the equity stock analysts whose paper game has turned into a leveragedvaluation bonfire. Money faces ruin, as Gold & Silver offer preservation andgrowth during the greatest transfer of wealth in over a century. Recall the

barons who exploited the Great Depression, whose names are part of the elitelandscape of banking and politics and philanthropy.

Still aiming for:

Gold -2050 to 2450 in 2012.

Silver - 95 to 130 in 2012.


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Gold and Silver Opportunity July 2011

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