Gold Stock Bull

Mr. Schiff was mocked for calling the market collapse before it happened, correctly predicted that gold would reach $1,000 in 2008 and recently schooled the CNBC crew at Fast Money as he predicts the market has much further to drop and gold will hit $2,000 in 2009. If you’ve been a subscriber to Gold Stock Bull for a while, you know we have been making similar calls and are aligned with his views. 2008 may prove to be the last time you will be able to get gold under $1,000 or silver under $10. The liquidation and deleveraging has created a short-term buying opportunity across all commodities and for precious metals in particular. Get some while you still can because when the floor falls out from beneath the dollar, the party is over.

24-Hour Gold has put together a nice page that tracks gold prices around the world and compares the spot price to the actual price being paid in the non-rigged free market (Ebay). As of today, Nov 21st, here are some of the most recent average completed auction prices for various gold forms. Keep in mind that gold closed at $801 today.

1 Ounce American Eagle - $954 (19% Premium)
1 Ounce Buffalo - $968 (21% Premium)
1 Ounce Gold Bar Bullion - $942 (18% Premium)
1 Ounce Canadian Maple Leaf - $918 (14% Premium)
1 Ounce Krugerrand - $935 (17% Premium)

There is plenty of evidence to support claims that the gold price is being suppressed. They naturally do not want gold, being a barometer of inflation and poor market conditions, to go ballistic. They might be able to control various markets, prices, interest rates, but they can’t control the true price of precious metals in the free market. Ahh, if they could only print gold and silver out of thin air like they do with paper money. But the fact that dealers are running out of the physical metal and prices at auctions are so far above the quoted Comex spot price should give even those that doubt this “conspiracy theory” a moment of pause.

Even Fox News recently published an article covering this discrepancy titled “Why Gold Is Down, But You Can’t Get Your Hands on Any.” It isn’t easy to prove or explain what exactly is causing the premium and I don’t claim to understand all of the dynamics. But I am fairly certain that precious metals are extremely undervalued and that Comex prices will begin to catch up to the free market prices.

There is evidence that the upside squeeze in the dollar is now ending. If this is the case, then we should see a bear market rally across all equities start to take hold. The dollar collapse will send commodity prices much higher and push gold back above $1,000 as we move into the new year.

Let’s close with some words of wisdom from Jim Rogers in his recent interview with The Financial Times. Jim talks sense about the dollar, gold, bailouts, the Fed and China. This is the first video of three. Click here for part 2 and part 3.

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Sure, I’ve heard this rumor several times in the past few years and nothing substantial has come of it. Will anything be different this time around?

One thing that could increase China’s willingness to diversify away from U.S. dollars and debt is the $5 trillion bailout tab that Washington has racked up in the last year. You are reading correct. The number is $5 trillion, not $700 billion. All of these bailouts will be funded by issuing new debt or printing new money and have already pushed the budget deficit to an all-time high of $237.2 billion in October. No matter your view on the markets, this scenario is hyper-inflationary once it plays out.

Thus far, the dollar has rallied in the face of these bailouts, but once the money hits the system there is nowhere for the dollar to go but down and this spells explosive new highs for precious metals and other commodities. I don’t assume to know how soon this will manifest, but it is worthwhile to have a core holding of precious metals and then add to your positions once the move begins. The upside potential is far greater than the downside risk at current prices.

Gold Rush by Benjamin Scent appeared in The Standard on Friday, November 14, 2008. Bloomberg published a similar piece the same day. Got gold?

The mainland is seriously considering a plan to diversify more of its massive foreign-exchange reserves into gold, a person familiar with the situation told The Standard.

The Asian nation may buy more gold for its reserves on concern the $700 billion U.S. bank bailout will cause declines in the dollar and Treasuries, the Standard newspaper in Hong Kong reported today, citing an unidentified person.

If you are interested in specific recommendations for how to best profit from the current economic crisis, the coming dollar collapse and resumption of the commodities bull market, join our Premium Subscription Service. Included is the monthly newsletter Road Less Traveled, a view of my portfolio and weekly email trading alerts. The cost is $35 per month and you can cancel at anytime if you are not satisfied.