Gold Price Close Today : 828.90
Change: -10.10 or -1.2%

Silver Price Close Today : 11.270
Change: -20.5 cents or -1.8%

US Dollar Index Today: 80.60
Change: 0.16 or 0.2%


In the face of last week, I'm not certain I have anything either intelligent or intelligible to say. The House finally passed the bailout bill, but only after the Senate had larded it with nearly $200 billion in tax breaks for the "friends of Congress". In the end, the banks got what they wanted, a gigantic grave to shovel all their corpses into, and the assured silence of the cops (read: Yankee Government). Relax. Government by the banks, of the banks, and for the banks shall not perish from the earth. The corruption is complete, the constitution dead, but, gee-whillikers, we won't have to face an awful deflationary depression. Nope, we'll face a hyperinflationary depression instead.


To markets. The week beat everything to death, & unless you are blind and know nothing about the US Treasury's slush fund ("Exchange Stabilisation Fund") installed in the 1930s to manipulate the prices of gold, the dollar, and whatever else might be fun to play with, you perceived that the US Treasury and Fed manipulated the dollar's value upward, in the face of the worst financial crisis in 70 years. Now the dollar index has again reached the long term downtrend line. Will it break out, or stall in a double top & fall back? I don't know. Friday's sell off in silver, gold, and stocks suggest the market proverb, "Buy the rumour, sell the news." The stock market's failure to rally on news of the bailout passing certainly looks bad for stocks. I simply do not believe that market demand drove the dollar up on Friday; twas the Nice Government Men "stabilising."

Markets are so out of whack I don't know what to say. In 28 years trading silver and gold professionally, I've never seen markets like this. The paper gold price closed Friday at $828.90, down $10.10, but if I want to buy gold to hold in my own hand, physical gold, I would have had to pay $879.07 an ounce (US$50 more) to get Mexican 50 pesos, US $923 to get American Eagles, and US$949.35 to get French or Swiss 20 francs.

The Silver Price closed at $11.27, down 20.5 cents, but to buy US 90% silver coin and wait 2-8 weeks to get it I would have to pay $15.18 per ounce, a 36% premium over the paper price. And silver American Eagles? Well, forget them. They cost $16.81, a 50% premium, and heaven only knows when I'll get delivery.

How can this be explained? It appears incontrovertible that demand for silver and gold, real, physical, deliverable silver and gold is so strong, so frantic, that the public is willing to pay huge premiums to buy it. That casts the validity of the paper price into doubt, and points to some government manipulation holding down the price, so the weakness of their rescue operation won't be called into question by a gold price over $1,000.

For the future it says to me that silver and gold prices will go much, much higher, and that this period of suppressed prices is a gift, an opportunity, to load up on silver and gold at bargain prices. Stocks will fall further yet. Whether the US Dollar extends its rally or not, it won't last long and in eight weeks or so will hit the skids again.

Many surprises are possible, but I cannot imagine how this bailout will fail to result in huge inflation, perhaps hyperinflation. Hold dollars at your own risk.