Precious metals, especially silver, bounded higher Wednesday after the BOJ announced that they would keep the 10-year JGB yield unchanged while boosting the yields of long bonds (a reverse twist), and further after the Fed failed to raise the Fed funds rate. Prices of silver and especially miners sold off on Thu and Fri. Gold closed at 1337.50, up $27. Silver closed at 19.69, up 90 cents after reaching a high of 20.06 on Thursday morning. The gold-silver ratio closed at 67.9, solidly down for the week. Miners closed up 4.2% for the week but down 4% from Thursday morning’s high.
We can only guess at this point whether the correction is over or correction lows will be retested. The correction low in the miners’ (HUI) index occurred on Sep 1 at 219.35, some 6.5% lower than Friday's close. If this level is tested and fails, we could see another 8-10% drop before buyers are enticed back in, though we doubt it. Whatever level marks the correction bottom, the following rally will likely be sharp. We will be holding our metals and miners and looking at further weakness as another buying opportunity.
Guns are what you talk about to avoid having to talk about Islamist terrorism. “Instead of debating the antiterror policy of the past seven years, we’re all arguing over gun control. Then again, if you were Mr. Obama or Mrs. Clinton, isn’t this the debate you’d prefer?” William McGurn, WSJ (image: Getty)
Why would anyone want a firearm? “Self defense, Locke wrote in his Two Treatises of Government, is a part of the law of nature and in consequence cannot be denied the community, even against the king himself.” Charles C.W. Cooke, National Review
Gold: Barbarous Relic
Cash or Gold? You decide.Watch full-screen.
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"I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my Country. Corporations have been enthroned, an era of corruption in high places will follow, and the money power of the Country will endeavor to prolong its reign by working upon the prejudices of the People, until the wealth is aggregated in a few hands, and the Republic is destroyed." — Abraham Lincoln, Nov. 21, 1864
Is America Headed for Bankruptcy? (July 2016) “America’s exploding deficit is cause for major concern and yet no presidential candidate in the running right now seems to be talking about it.” —Martin Feldstein
The Fed’s balance sheet is a pile of tinder, but it hasn’t been lit … inflation will eventually have to rise.
Where will the price of gold be in 5 years? Greenspan: “Higher.” How much? Greenspan: “Measurably.” (New Orleans Investment Conference, Oct 25, 2014)
Mercenary Musings: "We should always be cognizant that gold is the only real money and its true value is never subject to the decrees, fiats, machinations, whims, let alone the dreams, fantasies and whimsies of elected and/or autocratic national governments." — Micky Fulp
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TradersGame ebook guide for long-term precious metals investors:
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How to Buy Gold and Silver Today (to Preserve your Assets Tomorrow)
A Balanced Portfolio
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SF Fed Pres Says Worse to Come — Admits Policy Failure (August 2016) “The critical implication of a lower natural rate of interest is that conventional monetary policy has less room to stimulate the economy during an economic downturn, owing to a lower bound on how low interest rates can go. This will necessitate a greater reliance on unconventional tools like central bank balance sheets, forward guidance, and potentially even negative policy rates. In this new normal, recessions will tend to be longer and deeper, recoveries slower, and the risks of unacceptably low inflation and the ultimate loss of the nominal anchor will be higher. We have already gotten a first taste of the effects of a low r-star, with uncomfortably low inflation and growth despite very low interest rates. Unfortunately, if the status quo endures, the future is likely to hold more of the same—with the possibility of even more severe challenges to maintaining price and economic stability. To avoid this fate, central banks and governments should critically reassess the efficacy of their current approaches and carefully consider redesigning economic policy strategies to better cope with a low r-star environment.” —San Francisco Fed president John Williams
They’re Coming for your Cash "It might sound like a conspiracy theory spun by right-wing crazies. But judging by the increasing desperation of governments to reboot the world economy, it just might happen. . . If you don’t already own some gold in fully allocated form, now would be a good time to consider buying some." — Mark Nestmann