Precious Metal Prices Are Not Falling Soon

Gold bugs and speculators of the world are on the edges of their seats. With gold stopping $3 short of $1,000 yesterday, will this be the one that sticks?

Distributed for Honest Money

Distributed for Honest Money

Precious metals prices won’t fall very far unless governments worldwide stop spending funds they don’t have. (OK, China is spending money it DOES have. Everybody else? No way.) Will governments stop spending? It is doubtful. So with excess spending, we’ll see the accompanying monetary expansion from the central banks. That’ll give us more inflation. And the only effective defense against inflation is gold and silver.

Gold bugs and speculators of the world are on the edges of their seats. With gold stopping $3 short of $1,000 yesterday, will this be the one that sticks? Are the days of three-digit gold prices about to be a thing of the past? Your guess is as good as mine Amelia Island, but scanning through the pages of investment advisories, not one has issued any sell recommendations on the shiny metal — thus it’s safe to say all analysts are holding on for the ride.

Long term, gold and silver prices are going higher, Byron King, one of my favorite advisories, summarizes. Really, where else can they go? Lower? With the current monetary madness that’s infecting the world’s central bankers?

Silver in particular has been very interesting lately. With gold near $1,000 and the precious metals buzz revived.

If you believe silver to be a store of value as legitimate as gold, it looks like there’s more potential short-term upside for poor man’s gold. While gold is just a breath from all-time highs, an ounce of silver goes for $16 today, about 23% below its 2008 high of $21. Sellers will say this is because of silver’s industrial capacity — which has been beaten bloody by the credit crunch. Buyers, like Byron and most of us, say we’re heading into an inflationary period so great that this will be rendered somewhat irrelevant.

The gold/silver ratio is both in a state of decline while still higher than typical, another bullish argument for silver:

The gold-to-silver ratio has spent most of 2009 in a downtrend, meaning the price of silver has been rising faster this year than the price of gold. Just this morning, it hit 59, a 2009 low. During the high inflation of the 70s, the ratio stayed below 50. Back in gold standard days, it was hardly 15. So silver is undervalued compared to gold, and it has some momentum on its side. I’ve heard worse odds.

One last note on precious metals: The dollar is way stronger today than it was in March 2008 when gold and silver hit historic highs. The dollar index goes for 78.5, well above its low around 71 in 2008. The index is actually around break-even for the week; testament to just how bold precious metal buyers are becoming.

Feedburner Get the latest Amelia Island News, business, tourist activities
and videos every morning!


  1. Noogie6086

    I kinda have a problem with the “Financially Educated” people that keep jumping on the “hind sight” band wagon. Buy Gold, the dollar ain’t worth nothing.. Buy Silver, protect your future.. Got news for you.if you ain’t got the gold and silver salted away by now, you have missed the boat !!! Heck yes, I will be happy to sell you all the silver you want at 20 times face, I pulled mine out in the mid 60’s when a silver dime cost a dime. ($2.00 now, give me a call.) Now is the time to go for copper, bet you don’t know that an American Penny (yep, the old one cent piece that lots of people flip up on roofs) is worth almost 3 times face value, provided its dated 1982 or before. If its dated after 1982 go ahead and pitch it on the roof, its copper plated zinc. I know, you’re thinking “1 cent ..3 cents big deal…….When is the last time you tripled your investments in one day ??? Like never !!!
    I know, I know , it is only a penny… But..I bought my house with cash, bought my truck with cash, go on at least 4 cruises a year (paid with cash) and can almost fill up the gas tank on my 22 foot center console boat (bought with cash) (ask Jamie). No brag, just fact… It easy to predict the future tomorrow. The idea is to predict the future today !!!! side comment, remember the party at Judie and Lars house when I suggested y’all buy VSTN at 4 cents…….and you blew me off….. You guessed it, sold all I had at $1.02……OOPS, I feel another cruise comin on.

  2. Publisher

    I’m all for predicting the future today, but we’re not a financial investment subscriber website. I can give you hundreds if not thousands of tips like VSTN and I’m happy for you that it worked out. You are retired with time to spend on keeping an eye on your investments. Your comment was placed at around 3am, which means that even your time is your own. “Normal” people sleep at that time, because they have to face the other day another dollar syndrome. I’m in total agreement of buying cash for the toys you want in life; never done otherwise. The “funny” consequence of that approach in this society is that you DONOT have a credit history or score when you buy everything in cash.
    We simply have suggested to regular people to buy a silver coin a week. The man who did, Market Man, told me last Wednesday during a dinner at his house, that he had completely replaced the wealth he had lost in the 2008 crash by buying silver and gold every week.
    You are talking about speculating in a marketplace, we are talking about how fiat money (paper money) will completely loose its value and a precious metal standard (a basket of gold, silver, copper etc) will be reintroduced as the backing for any paper currency. That of course will not happen until the rest of the world decides that all the debt they are holding in dollars is worthless, as the Feds keep printing dollars.
    Is that tomorrow? Probably not. But it just might happen after June 30 when Bernanke’s $600 billion in QE2 has taken its place in the financial markets. If this injection does not create substantial employment (and it won’t), he’ll crank up the presses again and that may just be the proverbial drop.
    In any case we’re looking at a currency crisis, which is different from the 2008 financial crisis and most likely all the money you made from VSTN and the paychecks you receive from pensions and federal retirement will devalue to about 30% of its previous value.
    So again, we’re not an investor/speculator website with tips what to buy, short, hold or stay the hell away from. That is YOUR future today. We inform people in every day situations why they should prepare for the future TOMORROW and put part of their cash in precious metals. Before the 2008 crash people thought houses were a great place to put their money in. Now the majority of homeowners knows better.
    Good luck

  3. Jerry

    I like this, you are making my mind work and at my age its a good thing.. Yep, you were correct that I posted at around 3 AM.. I worked night shift (USAF retired)( United Airlines retired) almost all my life so I am conditioned to be at my best when most “Normal folks” are sleeping..When ya think about it I got a half days head start on the “Normals”. That can make a BIG difference in the stock market..
    I am an absolute contrarian (thats probably spelled wrong, I don’t use spell check) in almost everything. Don’t have a cell phone, but do have an answering machine, if you want to talk to me leave a message (Way cheaper). When I retired from the Air Force I gave my watch to the guy that replaced me.. Haven’t worn one since, that was in 1980. I probably have saved 20, 25 dollars in batteries.
    Yep,you are right again, my retirement checks,( which by the way, wern’t from unemployment but in part from 2 years in Viet Nam, never drew a cent in my life I didn’t earn)..would devalue 30% or more IF( note the caps) IF I stuck it in a bank at 1 or 2 % interest. I don’t !!
    As far as credit scores, who cares, its surprising how little a credit score means when you spread a bunch of greenbacks on the table…
    thanks for the reply Hans, looking forward to talking to you the next time….Its fun…

  4. Publisher

    Okay Jerry, one more reply before I’m called back to writing duties. We have quite a few things in common. First of all I’m the world’s leading contrarian (yes you spelled it right), but it is a luxury position that I (like you) gratefully can afford.I got rid of my cellphone recently as it became a nuisance I didn’t need. Phone and answering machine is enough to get my quick response. You want a quicker response try email or find another target.
    I have a beautiful expensive watch “green” watch that recharges in the light (no battery savings for me here) but I very rarely wear it. Beyond what I need for bills and an emergency, I don’t hold positions in cash. I cut up 8 credit cards in 1987 and never looked back. One debit card does the trick in every situation I need it. I hardly ever drive my car on island; a bicycle has replaced the need and added to my health and …. I’m a firm believer that the US Credit system is on a rapid slide out.

    As for you…send me stories on how your daily life unfolds as a contrarian baby boomer/retiree to share with others. I believe in Galileo Galilei when he observed over his lifetime that: ” You cannot teach anybody anything. You can only help them discover it within themselves.”

Leave a Comment