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Gold Price Close Today : 874.20
Change: -$14 or -1.6%
Silver Price Close Today : $12.231
Change: -75 or -5.8%
US Dollar Index Today: 79.49
Change: 1.77 or 2.3%
Listen to the latest from the Looney Bin. I've been hearing the whining and
whinging about the terrible bank-burdening accounting rule called "mark
to the market." They're blubbering that if it weren't for the mean-old
mark to market rule, they wouldn't have balance sheet problems.
Now mark to the market is an accounting rule that says,"What you paid
for it doesn't matter, what you think it's worth doesn't matter, only what
somebody is actually willing to pay today." Otherwise, how could you
ever know what a business is worth?
What are the banks saying? "We have rotten MBS that we paid 100 cents
for. Nobody wants the stuff so today it's only worth 15 cents on the dollar,
but we want to value it on our balance sheet at 100 cents."
Think about this. Abandoning mark to the market means you can never know what
a bank is really worth. It is the accounting equivalent of running naked
through the woods with your thumb in your mouth, blind running drunk. And the
powers -- the SEC & the Fed & the Treasury -- are seriously talking
about junking mark to market. No, I'm not drunk and I'm not joking. These are
not serious people.
Well, passing from the contemptible to the somewhat less contemptible, let's
look at what the Nice Government Men accomplished today, but first, a lesson
in manipulation.
Say the Plunge Protection Team doesn't like the Dow dropping 777 points in
one day. So the next day even before the market opens they go into the
futures market and buy Dow futures and S&P futures. Traders see those
futures rising and assume the market will rise, and so buy stocks.
Arbitrageurs also sell the futures and buy the underlying stocks to profit
from the value divergence, raising the Dow & S&P in the process.
And since it wouldn't do for the price of gold to blast through US$1,000
while a financial crisis loometh, the NGM must also control price of gold.
How to do that best, easiest, cheapest?
Sell platinum and silver, or better yet, platinum and silver futures (so you
don't need to own any actual metal) to drive those markets down. Traders see
them falling and assume the gold price will fall as well. Bingo! Manipulation
accomplished.
In the outcome, the Dow rose 485 points to 10,850.66, "on the
expectation the bailout plan will pass." Right. Gold came under attack
and lost US $14 to close at $874.20 while the silver price dropped 75 cents
to $12.2310 But those were just the futures markets spot month closes. In the
aftermarket the gold price today traded as low as $865, the silver price as low
as $11.70.
So what happened? The wholesale premium on US 90% silver coin rose from 185
cents an ounce over spot to 280 cents over spot by day's end. In other words,
the paper price dropped while the physical price rose. The fix ain't working.
NGM aren't taking any prisoners here, so y'all will have to play the man. I
told y'all volatility would increase, and that the NGM would attack silver
and gold. However, this will pass, just as the bailout will pass in a couple
more days. Don't expect any silver/gold correction to last more than 4-5
days, and I doubt it will go lower than this. Today marked a double bottom
with silver's last low in paper prices, but in physical prices it was a
higher low.
Silver and gold remain in a bull market. Keep on buying on every dip. Get out
of stocks and US dollars.
Y'all know probably that Abraham Lincoln stole his Gettysburg address line
-"government of the people, by the people, for the people" -- from
John Wycliffe (d. 1385). Now we are finally free of the quotation & the
notion, because now we have a government of the banks, by the banks, and for
the banks.
Argentum et aurum comparenda sunt -- -- Gold and silver must be bought.
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.phtml.
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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