Gold/Silver: You Can Fool Some Of The People...

"You can fool some of the people all the time, and all of the people some of the time, but you cannot fool all of the people all the time." Abraham Lincoln

Friday was an interesting day in the precious metals futures market, to say the least. Silver and Gold prices traded sharply lower in overnight dealings, but then found a strong bid as the sun rose on Wall Street. The rally that followed was exceptional!

Gold traded down to an intra-day low at $1130.40/oz and then rebounded sharply to an intra-day high at $1179.00 before ending the extended session at $1178.00 (+3.16% on the day). Silver traded down to an intra-day low at $15.04/oz, then rallied to an intra-day high at $15.88 before ending the extended session at $15.81 (+2.58% on the day). In morning dealings, Silver futures actually stopped trading at one point because of an Exchange software glitch when prices reached $15.88/oz, up 0.84 cents/oz or +5.60% from the intra-day low. I think the timing of the trading "glitch" in this market is noteworthy!

Precious metals mining shares, which have been absolutely battered recently, also rebounded sharply on Friday. The most popular Gold Mining Shares ETF, symbol GDX, advanced 8.31% on Friday. The Silver Mining Shares ETF jumped 7.87%. Stories of shortages in the global Silver coin market are now commonplace, and the U.S. Mint announced to dealers on Thursday last week that it had actually "sold out" of all its Silver Eagle 1-ounce coins (temporarily, of course). Despite sharply lower Gold and Silver prices over the last several months, sales of Gold and Silver freshly minted coins are "through the roof" according to the latest sales figures from the U.S. Mint.

Was Friday, November 7th, a significant day in the precious metals market? Most definitely! Was Friday THE turning point in a major new bull market for this unloved and under-weighted investment class? I think so!

You cannot fool all of the people all the time! Gold and Silver are REAL currency! Government paper money is what? Perhaps the answer is as simple as "Fiat" currency, which is easily debased and often subject to massive manipulation! Which "currency" would you like to own in this environment right now? "Real" or "Fiat"? Is the recent surge in Gold and Silver coin purchases one measure of how "people" are now voting on this issue? YES!!
 

Gold ETF (symbol GLD) Monthly Chart

Gold ETF (symbol GLD) Weekly Chart

Silver ETF (symbol SLV) Monthly Chart

Silver ETF (symbol SLV) Weekly Chart

U.S. Dollar Index (DXY) Weekly Chart

U.S. Dollar Index (DXY) Monthly Chart

Race To The Bottom: Worldwide Debasement Of Fiat Currencies

In the interest of full disclosure, I am long gold/silver mining shares and short the S&P 500 Index. The gold/silver mining share position has been accumulated over the last two weeks, while the short S&P 500 position was first initiated last Monday, October 27th. While it may be an understatement to write that this "hedge" was less than ideal late last week, I remain convinced that the next major move in precious metals prices will be sharply higher, and the next major move in U.S. equity prices will be sharply lower.

As of 8:00 PM Central Time Sunday night, when this latest column is being written, Gold is trading at $1,165/oz, while Silver is trading at $15.85/oz. Both prices are modestly lower than Friday afternoon's close.

On Friday, October 31, the Bank of Japan fired the latest cannon with respect to the debasement of worldwide currencies. The BOJ said it will increase its purchases of government bonds and other assets by between 10 trillion yen and 20 trillion yen ($91 billion to $181 billion) to about 80 trillion yen ($725 billion) annually. The European Central Bank will clearly be next with its own massive QE program, and China is the largest culprit of all, of course, with its ongoing stealth program of currency debasement.

With the U.S. Federal Reserve effectively "on hold" with no QE program currently in force, the U.S. Dollar has been exceptionally strong in foreign exchange dealings recently. The U.S. Treasury will soon have to halt this advance with intervention against the Dollar to prevent the complete collapse of U.S. exports and the related importation of less-than-desirable deflationary pressure on domestic prices for goods and services.

The race to the bottom for fiat currencies has accelerated, and the winner will soon be Gold/Silver prices!
 

Gold ETF (GLD) with 3-Std Deviation Bollinger Bands and Fibonacci Retracement Lines