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Gold
Price Close Today : 940.90
Change: 13.60 or 1.5%
Silver Price Close Today : 18.245
Change: 14.5 cents or 0.8%
US Dollar Index Today: 72.51
Change: -0.05 or -0.1%
Normally I don't read the news because it just makes me mad and I can't do
anything about it, but this morning Yahoo financial ran a catchy little
story: "Fannie, Freddie Stocks and Bonds Plummet. A firestorm of anxiety
over the ability of US
mortgage giants Fannie Mae & Freddie Mac to get the capital they need to
survive sent their stocks & bonds plummeting on Thursday."
Translation: As a sop to banks & the building industry, congress
years ago set up two Government Sponsored Enterprises, a.k.a. "engines
of inflation," called Fannie Mae & Freddie Mac. For at least the
last 10 years both have been really sick with corruption, but both were
necessary to have a hole into which to shovel & legitimate the rotten
mortgage-backed paper that Goldman Sachs and Bear-Stearns & their ilk
were floating, not to mention rotten mortgages from the land's length &
breadth. Now that the accumulating gas hath blown the sewer sky-high, the
problems with Fannie & Freddie are worsening, and nobody wants their
paper. But wait!
It's time to shuck the mortgage-backed credit crisis off onto the taxpayer's
back & away from Wall Street. Fannie & Freddie are in trouble, squawk!
Save them, save them, congress, or else how will the government bail out the
banks that caused this mess?
Bottom line: Does this mean more inflation, or less? Bernanke already bailed out Bear-Stearns and other
culprits, & has tossed into the fire about half the Fed's assets. Will he
toss in government assets to keep these two beasts alive? Can a duck swim? Is
a pig's rear pork? However they work this latest subcrisis
of the great crisis out, (1) they will inflate much more, & (2) the
taxpayer, not the culprits, will pay.
Having vented, let us now to markets!
STOCKS hinted, whispered, & winked today that they will, after all,
rally, rising 81.58 to 11,229 (Dow). Rally will be short-lived and shallow.
Doubt it will rise above 12,250. Stocks will, I fear, drop much further. Dow
in Gold Dollars today is barely 1/20th ounce off its post-1999 low. Sell
stocks while you may yet find a buyer.
The US DOLLAR INDEX, bless its heart, doesn't know which way to turn. It lost
8 basis points today to wind up at an equivocal 72.49. Most likely it is
headed up, probably to 74.50, but not fast, & not steadily.
Before I forget: Remember that the Fed (& the government) have two & only two weapons: inflation & blarney. They
are already shooting that inflation machine gun, & since that's not
working they will shortly blast us with blarney. Paulson, Bernanke,
even King George himself will appear mouthing how "the economy is
basically sound & recovering, the dollar is healthy, etc." &
other laughable incredibilities. But watch for it.
That's their next move, to buy time.
GOLD & SILVER PRICES have already broken out of their correction
ranges but they are in that sticky break out area where they have not yet
revved up the motor enough to pull away from the past. That would mean
crossing the last highs at $945 & $18.35 with a two-day close over those
levels. I have been thinking we would see at least one and maybe two more
down days before that happens, but all that may be past, thanks to Fannie,Freddie, Bennie, and Muffie.
Do not under ANY circumstances short silver or gold. In fact, buy and
keep buying all you can get. An enormous upmove is beginning -- don't miss it.
Franklin Sanders
www.the-moneychanger.com
Reprinted
with permission from The Moneychanger. Franklin Sanders
lives on a farm in Middle Tennessee by choice, deals in physical gold &
silver, and has been writing and publishing The Moneychanger for nearly 26
years. In 1993 he wrote Silver Bonanza for Jim Blanchard. Last year he
published "Why Silver Will Outperform Gold 400% and & The
Professional Trading Secrets That Will Make the Most of Your Silver &
Gold Investments," still available at www.the-moneychanger.com/order/publications.html.
You can sign up for Mr. Sanders' free daily e-mail
commentary on gold & silver at www.the-moneychanger.com, and download your free portfolio calculator to
keep up with your gold and silver investments.
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