Gold shot to new record highs today on Fed chairman Ben Bernanke’s remarks that “gold is not money“, and regarding the US central bank preparing another round of monetary easing policy should economic conditions warrant. The recent US economic data has been anemic, highlighted by the unemployment numbers coming in higher than expected.
The US dollar index slumped as Bernanke spoke, while gold and silver prices rocketed higher. Silver is now trading over $38 an ounce, breaking out of its recent range-bound trading action.
Youtube silver trader endlessmountain posted his reaction to today’s rally in the price of silver, and mentioned a possible “reverse Bart Simpson” pattern forming, with potential for a fast upward spike.
The USD Index took a hit today, as precious metals rose in tandem on continued news of the European debt crisis, and the downgrading of Belgium and Italy. The severity of this news is starting to sink in with investors as they realize the Euro is extremely weak, and the US Dollar is not much better. This chart overlays the USD Index graph and silver spot price showing the inverse relationship between the two.
Silver continues its range-bound trading, closing once again near the $35 mark. Sideways trading in the past week is healthy for the silver bull market, after its over-heated rise and rapid fall back to the $30s. Every day that goes by at this level, the bigger the base forming at these price levels. The 200 day moving average for silver is still around $28, but it is creeping closer to current prices every day. A drop below this average would be bearish for silver, but we continue to find support around $33.60 each time this low has been tested, which is bullish for the white metal.
A throwback to a long-gone era, when 20 cents would buy you a gallon of gasoline, pumped for you by a local kid, who would check your tire pressure and wash your windshield too. Now thanks to a debased US dollar and minimum wage laws, you have to pump your own damn gas, and pay near $5 a gallon to do it. Well some enterprising gas station owner is now selling his gas for the shockingly “low” price of only 20 cents a gallon. Of course, he only accepts silver coins from pre-1964. At today’s silver prices, this equates to a bit over $5 a gallon in fiat paper money.
The USD made a big move upward today as investors were fleeing the Euro amid renewed concerns about the Greek debt crisis. Commodities across the board were hit hard today, with silver and crude oil taking the major brunt. Silver found support at the $35 level and traded in a sideways range for much of the day. This chart shows the US Dollar and Silver prices overlaid, showing the reversing mirror-effect a rising dollar has on the price of silver. The second graph is the price of silver overlaid with the Euro chart, showing how they fell in tandem today versus the dollar.
Mike Maloney released a great video this weekend, bringing a great long-term perspective on silver, and where the dollar is ultimately headed. As Mike explains, “There is no scenario where gold and silver do not rise.” Ultimately, they are destined for a far higher price. Mike warns against buying silver on margins, buying futures and options and using the ETFs, because you can be scared out of the game much more easily. Buy the physical metal with cash, not borrowed money, and stay out of the paper markets. Mike also tells of his experience buying gold right before an extreme dip in price, which might have flushed out a weaker hand. However, looking back he would jump at the chance to buy at the price he did that day. Ultimately, the purchasing power of gold and silver must increase dramatically.
“If all you have is digits, and not ounces, you are going to be in trouble.”
Back in March I reported on Mr. Stewart Baxter, paid shill of the Federal Reserve who was tasked with joining up with silver-related Facebook groups in order to spread disinformation and fear to silver investors. Well, the Baxter is back, and he is spreading his dollar propaganda as fast and as furiously as his little stubby fingers can manage.
The price of silver shed $5 in spectacular fashion in after-hours trading Sunday night. Double hikes in margin requirements in last weeks volatile trading has forced the leveraged paper traders to put up more cash or unwind their positions. Silver found support at $42 after the free-fall and is currently working its way back through $43.
Volatility in silver has been extremely high, with prices pulling back from the recent parabolic upward moves to close at $45.60 today. All eyes are on tomorrow’s Federal Open Market Committee (FOMC) and Federal Reserve Chairman Ben Bernanke. If the Fed intends to continue quantitative easing, we can expect continued gains in stock prices and precious metal prices. If they are cutting off the printing presses temporarily, we can expect a temporary pull back in metals prices.
In the long term, precious metals will always win out over fiat currencies. In the longest of terms, Mother Nature ensures all paper currencies will eventually be worthless as dirt. It looks like she has already had it with the money printing as news came out this week that termites in India have eaten millions of rupees in a bank.
Gold shot to new record highs today on Fed chairman Ben Bernanke’s remarks that “gold is not money“, and regarding the US central bank preparing another round of monetary easing policy should economic conditions warrant. The recent US economic data has been anemic, highlighted by the unemployment numbers coming in higher than expected.
Back in March I 
