The Original Silverbug
(Originally published in The Dines Letter - 13 February 2009)
LATEST FROM "THE ORIGINAL SILVERBUG": HEIGH-HO SILVER, AWAY!
Be faithful to that which exists nowhere but in yourself - and thus make yourself indispensible. André Gide
Even as the managements of the world''s leading banks defend themselves before Congressional inquisitors, with their lugubrious faces as saddened as if they had been led there in tumbrels en route to the guillotine during France''s Revolution, the pessimism in the press and media reads like a funeral march.
Yet, there is one group doing well, as signaled in our Annual Forecast Issue: silver! As they quietly make repeated new highs, we continue to finger the silver and gold groups as leaders in the next market rally, and a decent chance for our loyal, long-term TDLrs to make money. Until this week, the rallies in the precious metals had been completely overlooked because anything positive did not fit in to the Herd''s pessimistic Mass Psychology, and thus perhaps was considered an illusion by some. However, just this Tuesday, we noted Bloomberg Television reported that gold and silver bullions were moving up, although not yet a word about up trending miners of those metals. For more on gold and silver, please refer to pages 4 thru 8 of your Annual Forecast Issue, and also consult the excerpt below, reporting on the stampede to buy gold bars and coins with the typically leading-edge quality reporting of the Financial Times (London). Note also the chart of ETF holdings of physical gold (bottom chart) marching ever higher ahead of the price of gold, meaning that the stampede out of paper money and into real money is absorbing all the selling and continuing to forge higher in its flawless Uptrend (U).
For serious market students, silver bullion''s 90-day momentum has recently been this Oversold only twice before, since 1990 (Jun 98 and Aug 04) both of which times turned out to have been Bottom Formations that led to important profit possibilities for our TDLrs, yet another subtle factor in our optimism toward the silver metal. The Hive generally remains oblivious to silver''s bull market.
1. Investors are taking a cue from the rappers and adding more bling to their lives - not to hang around their necks, but to stash away in safes. Physical gold is hot. Not gold stocks or ETFs, but the glittering stuff itself. You''ll read about it in our writeup of the latest Barron''s Roundtable, and the numbers are irrefutable. London-based World Gold Council said investment demand for gold, mainly bars and coins, surged 121% in the third quarter as investors rushed to safety. But how, exactly, do you buy gold? Though you can visit a goldsmith and buy 24-karat jewelry, goldbugs favor bars, both big and small, and guaranteed coins issued by various world mints. Coins are easier to trade, but both coins and bars can be bought through hundreds of dealers'' sites. Christopher C Williams, Barron''s, 12 Jan 09
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