You may have noticed that the spot price of silver jumped another 20 cents yesterday. Take a few minutes to read these two interesting analyses that recently ran at Gold-Eagle.com: http://www.gold-eagle.com/editorials_05/stein012706.html and, http://www.gold-eagle.com/editorials_05/murphy012806.html
In the latter article, it is noted that the silver 60 date lease rates just went into an upright spike. This is a clear sign that alarm bells have sounded at the COMEX and they are
trying desperately to suppress the galloping spot and futures silver prices. (Some futures contracts are presently pushing $12 an ounce!) But unless the COMEX does a repeat of its 1979-1980 shenanigans and changes the margin requirements for the futures market, then they won’t be successful at holding down the spot price of silver. I suspect that a total desperation move like that won’t happen until Kodak and the other big industrial users start to whine. You can expect that to happen once silver crosses the $40 mark. But by then it won’t matter. Even if they slap a 100% margin requirement on silver futures contracts (like they did a quarter century ago, to stop the Hunt Brothers , it will be too late. Why? Because by then, the Generally Dumb Public (GDP) will have finally woken from their slumber and will be swarming to their local coin shops to plunk down some of their spare cash to get some 1 ounce silver rounds or pre-1964 junk silver. At that stage, “junk” silver will probably be selling at 20+ times face value.
I predict that this market is going to completely get away from the COMEX and Wall Street manipulators. Today (January 31st) they will probably do their best to push the metals prices down temporarily. After all, they wouldn’t want to cast a bad light on either the President’s State of the Union address or upon Ben Bernanke’s first few days at his new central bank job. They’ll sell enough to keep the price down for a few days or perhaps even for a few weeks, but inevitably it will be like trying to stop a a rising tide. The mainstream media will probably refer to this as “Bernanke’s first management crisis.” Given the fanciful underpinnings of the U.S. Dollar (which has a REAL value that approaches ZERO), this will doubtless be the first of several Volker-esque crises for “Helicopter Ben.”
The futures markets for gold and silver are getting frantic. I suspect that there will be a massive short squeeze in the near future. The run up in prices may take all but us die-hard silver bears by surprise. Mark my words: Silver could double in price and then double again, all within the span of a month, once the perma-shorts realize that something has changed fundamentally and they have to cover their short positions, fast. As I’ve mentioned before, the silver market is very thin compared that of gold, and hence tends to be more volatile. After a short term correction, look for some volatile moves upward in the near future!
Today’s Daily Reckoning had some extensive quotes from Dr. Kurt Richebächer. Here is just a brief snippet:
“You know what amazes me most is that Americans have come to believe that consequences no longer exist. They think they can do whatever they want for as long as they want…and nothing will ever go wrong.” This is probably the first generation of Americans to believe that savings don’t matter. It is also the first generation to believe that America
doesn’t really need to make anything; it can buy what it needs from abroad. But where will it get the money? “That’s the thing,” Dr. Richebächer went on. “They think the bubble
economy will never end, but bubbles always end. This one will end, too. And there will be consequences, and not very pleasant ones. This is not
something the Fed can manage…”
The Gold-Eagle pundits summarized Dr. Richebächer’s conclusion thusly: “According to Dr. Richebächer, our nation’s “recovery” is largely a matter of the short-term transference of money from people’s home equity, secured and unsecured loans and credit cards into consumer-level retail purchases – into the hands of financial institutions or the risky realm of
speculative investment.”
If you have the time, read Dr. Richebächer’s full report: “Your Choice: The Truth – Or The Consequences” See: http://www1.youreletters.com/t/332871/7796936/783705/0/