Peter Schiff says move to Dubai!

Filed under: Dubai Property, GCC Currency Union, Peter Schiff, US Bonds, US Dollar, US Stocks — peterjcooper @ 4:03 pm

047038378xReading Peter D. Schiff’s ‘Little Book of Bull Moves in Bear Markets’ it was intriguing to see him become so frustrated with the US economy that he advocated emigration, at least for a few years.

‘If you are more adventurous, you might consider the nations of the Persian Gulf, such as Dubai, Qatar, Kuwait, or the United Arab Emirates,’ he opined. ‘Flushed with petro-dollars and unburdened by taxes or regulation, the Arab world seems destined to reclaim a more prominent role in the years ahead.’

How prescient! Of course, clearly neither Mr Schiff or his proof readers have much knowledge of the region or they would know that Dubai is a city in the United Arab Emirates and not a separate nation.

The ADX is not used to know what the trend is but instead it is used to indicate whether the current trend is strong or is turning weak on Crypto CFD Trader. The indicator is used in the market when the market is trending since it lets you understand whether you should still hold on to your positions or sell them off.

That much any American reader ought to establish before jumping on one of the excellent new Emirates Airlines’ flights from the States and rushing into business in Dubai, and that is what he suggests, ‘if you’ve ever had any inclination towards entrepreneurial life.’ Well, at least buy a copy of my book ‘Opportunity Dubai’ before taking that advice!

Changing times

The problem is that Mr. Schiff’s world view – only completed this summer – already looks a bit out-of-date. His world then was one of high oil prices, a falling dollar and a US economic collapse isolated from the rest of the world.

What we now know is that high commodity prices insulated commodity producing countries from the sub-prime crisis until the summer. But once commodity prices collapsed – oil from $147 to $34 a barrel – so did these supposedly immune economies.

The city of Dubai’s financial market is 75 per cent down this year, among the worst performers and well ahead of the US decline of 40 per cent for the S&P. House prices in Dubai are down 40-50 per cent this autumn, far ahead of Main Street USA.

Dollar appreciation

The dollar’s devaluation also swung into reverse as capital markets imploded this autumn with a flight to quality and a recovery for the greenback. So much for the US devaluation trumpeted by Mr. Schiff. It is clear that other global economies are also in trouble, and Europe’s debt problem could be bigger than America’s.

However, Mr. Schiff’s free market prescription for US recovery: allowing lame ducks to die, bankrupting major corporations and banks and removing social security, has no chance of being adopted by President Obama.

On the other hand, a very vigorous shake-out is underway in the UAE with expatriate labor summarily dismissed with modest compensation, downsizing of major real estate projects, continued investment in major infrastructure schemes and a rapid reorganization of national debts.

In truth the UAE (and that includes Dubai) can manage something far closer to a free market solution to the economic crisis than the USA can ever hope to achieve. Perhaps Mr. Schiff is right Americans ought to move to the Persian Gulf countries.
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What does backwardisation mean for silver?

Filed under: Gold & Silver, US Dollar — peterjcooper @ 10:06 am

silveralertprofilelogoAntal E. Fekete, a professor at Intermountain Institute of Science and Applied Mathematics, and frequent writer on precious metals, answers a timely question:

Q: People from around the world keep asking me what advance warning for the collapse of our international monetary system, based as it is on irredeemable promises to pay, they should be looking for.

A: My answer invariably is: ‘watch for the last contango in silver’.

It takes a little bit of explaining what this cryptic message means. Contango is that condition whereby more distant futures prices are at a premium over the nearby. The opposite is called backwardation which obtains when the nearby futures sell at a premium and the more distant futures are at a discount.

When contango gives way to backwardation in all contract spreads, never again to return, it is a foolproof indication that no deliverable monetary silver exists.

Silver price hike

Thank you professor! This is really an extension of the argument on this website dating back to before the summer rout of precious metal prices.

This means that the bullish trend is in most probability dying out. Similarly if the commodity chart is making a lower low but the CCI indicator is making a higher low than this means that the bearish trend is ending.

These are some ways in which the commodity technical indicators are used but they are not fool proof. You need to use them on Bitcoin Code along with the support and resistance levels to use as a confirmatory tool.

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Physical stocks are low and the futures price has been distorted by big hedge fund forced-sales – now we are coming to the day of reckoning when the physical shortage starts to determine the spot price, and not the futures market.

The upside – which should have been there all along – will now come back with a vengeance and smash the few remaining shorts. This is likely to be spectacular – but after the culling of bulls recently not all precious metal fans will be there to benefit.
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What does the $3.5bn Saudi gold rush in two weeks mean?

Filed under: Gold & Silver, Oil Prices, UAE Stocks, US Stocks — peterjcooper @ 8:22 am

saudi1_200revThe revelation on this blog, actually sourced from what appears to be a reliable story in the Gulf News, the leading regional newspaper, that Saudi Arabia has spent a total of $3.5 billion on gold over the past two weeks has naturally attracted huge worldwide interest.

I can not verify the source but all I can say is that this has the hallmarks of a genuine story, based on my 25 years in financial journalism. First, it was buried on an inside page and the amount was given in UAE currency later in the story – hardly the action of somebody looking to manipulate the gold price, more an indication that the sub-editors did not understand the importance of this story.

Second, this is how the best stories emerge from Saudi Arabia – the market is not very transparent but insiders do notice big changes and pass this information on, and it surfaces as well sourced rumor. I am afraid this is about as good as it gets in the Middle East.

Truth in rumors?

After 9/11 we had rumors about chartered 747s flying full of gold and dollars back to the Kingdom to avoid the increased scrutiny of US regulators. Was it true? Real estate here is said to have boomed on the back of this new money – that certainly happened, did the transfer? We do not know for sure.

So what is going on? By whom and why are these gold purchased being made? Again we can only indulge in informed speculation – nobody is ever going to give an on the record comment on this.

However, we do know that the Saudi stock market has crashed over the past two weeks. There has been an enormous amount of money cashed out. The obvious source of the money for gold purchases has to be that money.

The problem for Saudis is that by cashing out of local stocks they get their own riyals in exchange, and riyals are effectively US dollars due to the currency fixed link. The US dollar is presently high, so diversifying into another asset class makes sense.

But what do you buy? What is safe these days? Dubai villas, perhaps but the rest of regional real estate is crashing? US stocks – you must be joking?

Conspiracy nonsense

I think some of the conspiracy theorists are wide of the mark. People love to come up with elaborate rationales for actions. It is laughable to see Saudi Arabians rushing to buy gold as a conspiracy to bring down the West. The West has brought that on itself, and the Saudis are just trying to find an effective shelter for their wealth from that collapse.

Gold and silver are precious metals with a limited supply that retain their value over time. Also if we are in a repeat of the late 1970s, as this author believes, then cash and gold are the safe havens, with silver probably the best of all, if very volatile.

Therefore, my lesson to draw from the Saudi gold rush is that very much higher gold prices are coming and investors in the Kingdom are making a logical choice ahead of the global pack. If you can not beat them I would join them and preserve your capital.

Incidentally, what I would like to know is who is buying? The report in Gulf News makes it sound like the broad mass of local investors, not the government, and that would explain why such a report has surfaced. If it was the government we would not have heard about it.

So this is just a local flight to a safe haven asset class by people panicking about plunging local and global stocks. But $3.5 billion in two weeks is a big shift in demand for gold in a short period.
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Saudi Arabia buys $3.5bn of gold in two weeks

Posted on 13 November 2008 with no comments from readers

There has been an unprecedented surge in Saudi gold purchases in the past two weeks with over $3.5 billion being spent on the yellow metal, reported Gulf News citing local industry sources.

Gold market expert Sami Al Mohna told the leading regional newspaper that this buying had substantially increased the gold reserves of the country: ‘Many Saudi investors see this as the right time for making investments in gold as the price is the most reasonable one at present’.

He said gold was seen as a traditional safe haven at a time of global financial turmoil. Gulf regional stock markets have fallen very sharply since early October, leading to an exodus of cash which needs to find a safe haven.

Gold is currently trading at prices similar to a year ago, and 30 per cent off its March peak. Saudi investors clearly think this is the right time to buy and are piling into gold.

News about the Saudi gold rush is bound to fuel speculation about the alleged large physical gold transactions that have been taking place at prices will above the spot price set in the futures market. It is very unlikely that such a large hoard of physical gold could have been bought for the depressed current price.

Market analysts such as the legendary gold bug Jim Sinclair have pointed out that if less than two thousand millionaires insisted on delivery of physical gold at the end of their futures contracts, as is their legal right, then the spot gold market would jump to new highs.

Saudi Arabian investors have spotted a bargain, and it may be a much better one than they think.

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In addition, these jewellery items have

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Saudi Arabia buys $3.5bn of gold in two weeks

Filed under: Gold & Silver — peterjcooper @ 8:55 am

welcome21There has been an unprecedented surge in Saudi gold purchases in the past two weeks with over $3.5 billion being spent on the yellow metal, reported Gulf News citing local industry sources.

Gold market expert Sami Al Mohna told the leading regional newspaper that this buying had substantially increased the gold reserves of the country: ‘Many Saudi investors see this as the right time for making investments in gold as the price is the most reasonable one at present’.

He said gold was seen as a traditional safe haven at a time of global financial turmoil. Gulf regional stock markets have fallen very sharply since early October, leading to an exodus of cash which needs to find a safe haven.

To narrow down on the commodity trading indicators on Crypto Code one needs to understand that the indicators cannot be used independently to give buy and sell trade signals. These indicators have to be used with the support and the resistance levels and can be used only as a confirmation to the trades. This will help to increase the probability of the trades working out.

One of the indicators used popularly to trade in the commodity markets are the moving average indicator. This is a simple indicator and also one that is very commonly used in order to tarde the commodities. Two moving averages are placed on the commodity chart and you need to look out for a crossover of the moving average.

Gold is currently trading at prices similar to a year ago, and 30 per cent off its March peak. Saudi investors clearly think this is the right time to buy and are piling into gold.

News about the Saudi gold rush is bound to fuel speculation about the alleged large physical gold transactions that have been taking place at prices will above the spot price set in the futures market. It is very unlikely that such a large hoard of physical gold could have been bought for the depressed current price.

Market analysts such as the legendary gold bug Jim Sinclair have pointed out that if less than two thousand millionaires insisted on delivery of physical gold at the end of their futures contracts, as is their legal right, then the spot gold market would jump to new highs.

Saudi Arabian investors have spotted a bargain, and it may be a much better one than they think.
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Is the silver futures market about to crack wide open?

Filed under: Gold & Silver, US Stocks — peterjcooper @ 9:23 am

The silver market has been looking interesting for months, despite the price collapse. Beneath the surface of the recent spot price falls the structure of the market is changing in such a way that a powerful bull market is being set up.

Metal holdings for Barclay’s iShares Silver Trust (SLV) have so overwhelmed selling pressure that the trust has added a total of 68,921,884 ounces of silver to its holdings so far this year, reported resourceinvestor.com. Yet late last week the COMEX futures market reportedly held 131,530,256 ounces of silver in its warehouses.

Thus so far in 2008 the leading silver exchange traded fund SLV has added the equivalent of 52.4% of all the silver metal that the COMEX futures market has in its vaults. That surely represents amazing buying pressure at a time when silver prices are in crashing. Something is not right clearly.

False market

Then as resourceinvestor.com comments: “if we consider all of the 95,873 open contracts for silver on the COMEX as of last Tuesday, then we find that the COMEX traders are trading contracts either side, long and short, of 479.4 million ounces of silver but only have 131.5 million ounces behind it.”

Why then have silver prices been falling? That brings us back to the alleged manipulation of the market by two US banks over the summer, now under investigation by the regulator.

Resourceinvestor.com says: “Exactly two U.S. banks continued to keep their thumb on the COMEX silver market as of October 7 when the silver price had already declined from $19.00 to $11.00 and change in the face of severe physical silver shortages of metal on the street. As of October 7 the two largest commercial banks still held a scandalous 23,308 net short silver contracts when the entire commercial net short position was 29,829 contracts. That’s right, two banks still dominated the small silver futures market with over 78% of all the commercial net short positioning.”

This is not only downright illegal and unfair, it is producing a false market. And in false markets things can change very rapidly. Is it any wonder that metal is now flowing out of the COMEX and into the physical market. SLV investors sense a bargain and are effectively pulling silver stocks out of the futures market where the price is false.

COMEX exit

Resourceinvestors.com notes that over two million ounces of silver have fled the vaults of the COMEX in just the last five trading days alone. How long before that trickle becomes a flood and the futures market in silver is effectively shut down and the physical spot market takes over?

Expect to see silver prices head to the moon. In the late 1970s it was a bungled price manipulation by the Hunt Brothers that sent silver prices super high, and bust the market for the next two decades. Silver today is trading at around $10 an ounce compared with an average price of $24 an ounce in 1980. What else today costs a fraction of the price 28 years’ ago?

Now it will be a bungled price manipulation by US banks that releases the silver price from its artificially depressed state. Silver bugs have gotten silver hair waiting for this to happen, but it is finally upon us and nothing and nobody can stop it.

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An investment tip: stock up on physical silver, bars, coins and ‘pure play’ silver equities which should deliver the most outstanding profits of all. These are extraordinary times in capital markets and exactly the sort of period when such extraordinary events happen.
Order my book online from this link

Is the silver futures market about to crack wide open?

Posted on 02 November 2008 with no comments from readers

The silver market has been looking interesting for months, despite the price collapse. Beneath the surface of the recent spot price falls the structure of the market is changing in such a way that a powerful bull market is being set up.

Metal holdings for Barclay’s iShares Silver Trust (SLV) have so overwhelmed selling pressure that the trust has added a total of 68,921,884 ounces of silver to its holdings so far this year, reported resourceinvestor.com. Yet late last week the COMEX futures market reportedly held 131,530,256 ounces of silver in its warehouses.

Thus so far in 2008 the leading silver exchange traded fund SLV has added the equivalent of 52.4% of all the silver metal that the COMEX futures market has in its vaults. That surely represents amazing buying pressure at a time when silver prices are in crashing. Something is not right clearly.

False market

Then as resourceinvestor.com comments: “if we consider all of the 95,873 open contracts for silver on the COMEX as of last Tuesday, then we find that the COMEX traders are trading contracts either side, long and short, of 479.4 million ounces of silver but only have 131.5 million ounces behind it.”

Why then have silver prices been falling? That brings us back to the alleged manipulation of the market by two US banks over the summer, now under investigation by the regulator.

Resourceinvestor.com says: “Exactly two U.S. banks continued to keep their thumb on the COMEX silver market as of October 7 when the silver price had already declined from $19.00 to $11.00 and change in the face of severe physical silver shortages of metal on the street. As of October 7 the two largest commercial banks still held a scandalous 23,308 net short silver contracts when the entire commercial net short position was 29,829 contracts. That’s right, two banks still dominated the small silver futures market with over 78% of all the commercial net short positioning.”

This is not only downright illegal and unfair, it is producing a false market. And in false markets things can change very rapidly. Is it any wonder that metal is now flowing out of the COMEX and into the physical market. SLV investors sense a bargain and are effectively pulling silver stocks out of the futures market where the price is false.

COMEX exit

Resourceinvestors.com notes that over two million ounces of silver have fled the vaults of the COMEX in just the last five trading days alone. How long before that trickle becomes a flood and the futures market in silver is effectively shut down and the physical spot market takes over?

Expect to see silver prices head to the moon. In the late 1970s it was a bungled price manipulation by the Hunt Brothers that sent silver prices super high, and bust the market for the next two decades. Silver today is trading at around $10 an ounce compared with an average price of $24 an ounce in 1980. What else today costs a fraction of the price 28 years’ ago?

Now it will be a bungled price manipulation by US banks that releases the silver price from its artificially depressed state. Silver bugs have gotten silver hair waiting for this to happen, but it is finally upon us and nothing and nobody can stop it.

An investment tip: stock up on physical silver, bars, coins and ‘pure play’ silver equities which should deliver the most outstanding profits of all. These are extraordinary times in capital markets and exactly the sort of period when such extraordinary events happen.

The futures in silver and gold rule statement prices of the commodity markets, the purchase and sale of 5000 troy ounces of silver with high perfection in the COMEX exchange. A good study and  this review will give the contract pricing to go upward or downward based on several factors, while the market for silver futures are opening wide as the precious metal is nearing shortage.

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Jim Rogers is shorting US treasuries

Filed under: Oil Prices, US Stocks, Video — peterjcooper @ 9:41 am


Legendary investor Jim Rogers is shorting the US treasury market. As he explains in this interview a hyper inflationary global economic environment is being created by government fixes. This will turn the current US dollar rally into a rout.

More immediately the big rally in US stocks yesterday happened when the bond market was closed for Columbus Day. Now we should have

and start putting money from their savings account into their trading account in the hope of getting back the money that they have lost. This leads to even further losses. Trading without having proper trading knowledge or without having a trade plan is an act of pure gamble. Trading is a game where one needs to work out the probabilities. One should also know ways to control emotions and pick up trades carefully that has a higher probability of working out.

It is really dangerous to trade based on recommendations by brokers or analysts on TV’s. The new trader follows these tips blindly. The regular day of a novice trader starts with switching on the TV in the morning and jotting down the trades that the so called trading pundits give on TV. As soon as the market opens they rush to place the trades that they had noted down in the morning. Understand that not every analyst on TV is an expert and following then blindly will do you no good. It is important that you do your own research before taking the trades. You should rely on your research or research done by an expert brokerage firm to decide on what to buy and what to sell in the market.

Trading using margins seems tempting. It feels like you are trading using some free money. When the broker gives you margin money to trade on then this lets you trade for more amount of capital than what you have in your trading account. This however just means that now you have more open positions. If you tend to lose on the Bitcoin Trader platform then you will have to pay off from your own pocket which could be paying from your savings. Margin trading is definitely not recommended to those who are new to trading.

an enormously concentrated sell-off in bonds as a follow through from yesterday’s equity rally – that should be the end of the bubble in bonds.

The time of maximum fear in markets, GCC to recover first?

Filed under: Dubai Property, Gold & Silver, Oil Prices, UAE Stocks, US Stocks — peterjcooper @ 9:52 am

The global economy is heading for a deep recession. That much is clearly being predicted by global capital markets with credit stopped and equities in free fall. But a point of maximum decline will soon be reached. However, I doubt if buying on this particular dip will prove a very good idea.

Dominique Strauss-Kahn, the IMF’s managing director, said yesterday: ‘Intensifying solvency concerns about a number of the largest US-based and European financial institutions have pushed the global financial system to the brink of systemic meltdown.’

These traders do not have any trade plan and they blindly begin to trade. All that these traders do is to jump into the trades and take trades based on news and tips. This leads to losing their capital fast. After having lost a substantial amount of money they get revengeful when trading on Bitcoin Loophole.

And he warned global equities could plunge by a further 20 per cent this week unless governments deliver concrete action.

Looking at the G-7 meeting communique yesterday there is little sign of anything ‘concrete’. But there are going to be a lot more ad hoc actions by individual governments and my guess would be another coordinated rate cut.

The problem is that economies are now facing the pain of de-leverage – the reverse of the credit boom that accelerated economic growth. This is happening quite fast but the consequences of the damage will take years to heal in terms of business failures, personal bankruptcies and government budgets.

Rally for suckers

From an investment point of view, I expect a sucker’s rally to occur – perhaps as early as later on this week. But this rally will not hold, and those buying on the dip will be caught out as stocks move even lower. Expect our old friend Warren Buffett to be cheerfully warbling while waiting for a true market bottom. That could take two or three years.

We have a systemic financial crisis. This is very different from the normal business cycle. It also takes a lot longer to correct back again. There are more challenges to come, and not just a spate of bank and hedge fund failures.

How much US paper will global bond markets accept before the low coupon becomes unacceptable? A bond market crash will follow and the US dollar devalue very significantly. Only when the bond market bubble is deflated could markets truly be considered de-leveraged.

Precious metals

By then the only global investment game will be precious metals which is why buying gold and silver continues to make good sense. Nobody has yet appreciated the true depth of what the world has stumbled into but we do have precedents like 1974 and the late 70s.

In the Middle East where I live the scenario that seems most likely is a downturn that will be most dramatic in the off-plan property sector and also shake the banking sector. However, the government will be able to step in once the worst of the real estate shake-out is over, and given that oil prices will be one of the first things to recover this means that the Gulf States could survive the crisis relatively unscathed.

However, all new off-plan property projects will now either be called off or stop due to a lack of sales. The situation for gamblers with a number of part-paid properties and no liquidity is also terminal. Nobody will want to buy part-paid with the obligation to pay further installments in an uncertain market.

Luxury apartments also look an over-supplied market where prices will fall. Agents report this market has frozen, that means price falls will follow.

Oil price outlook good

But what global governments are doing to rescue the world economy is highly inflationary and this is going to have a far more immediate impact on oil and gas prices than in rescuing their bankrupt banking systems. High energy prices drive the GCC economies. Yet we can expect a sharp fall in oil prices as the global recession starts which will send some people into a panic. This will not last for long. Why?

Because inflation will be the unintended economic impact of the global financial bailout. Therefore there will only be a relatively shallow recession in the Gulf States – albeit fatal for overstretched property speculators and many real estate developers. But for those with the capacity to tough it out, this is the place that will recover first from the global recession and still have the best growth prospects for the near future.

My advice is to hold on if you are in Gulf real estate – actually you have no choice as the market became illiquid last week. Blame the world financial crisis if you like or a bubble that obviously had to correct. But if you have over-stretched, over-borrowed or got too greedy then you are in trouble.

Have gold and silver prices reached a tipping point?

Filed under: Gold & Silver, US Stocks — peterjcooper @ 9:47 am

Gold and silver went through a severe correction this summer just like the correction in 1975. Then gold prices dipped by almost 50 per cent from peak to trough.

Since its March all-time high of $1,030 an ounce, gold has completed a perfect 38.3 per cent Fibonacci retracement, bouncing back to current price levels. Silver also followed the Fibonacci sequence, albeit with a deeper 50 per cent fall from March peak to the trough.

It is important therefore to note that price corrections are behind us in precious metals. These were fairly brutal commodity price corrections. But the rebound has been quick in the case of gold and can only be around the corner for silver – the two seldom move out of synch for long.

Tipping point

Now we have to look at the supply and demand position to determine whether this could in fact be a tipping point. The downside after a big correction like we have just seen is clearly small or entirely gone.

Gold first: last week investors queued in the streets of London to buy gold. We have a similar rush in the souks of Dubai. Gold coins are selling at the highest premiums to spot gold price in 30 years, and stocks are running out.

Gold has risen sharply in price this week despite a very sharp rally in the US dollar, lower oil prices and collapsing stock markets. Usually the dollar and gold do not move in the same direction, so this is highly significant. Gold also usually falls with oil.

Bullion premium

In silver the premium paid for bullion bars is up to 50 per cent above the spot price as dealers are running low and demand remains very strong. Why are silver premiums higher than gold: simply because silver stocks are tighter.

This is the classic case of tugging on a piece of elastic fixed to a brick. The pull of the retail price is suddenly going to increase the silver spot price. It just has to as bullion dealers replace their stocks.

We now also have an official enquiry into the shorting of the silver market by two US banks over the summer that crashed the price. No matter that the banks will probably be exonerated. They have removed their short positions – so there is nothing there to prevent silver prices surging ahead.

Supply shrinking

Meanwhile on the supply side things could hardly be better for price rises in precious metals. Central banks are withdrawing planned gold sales while output is falling at the major producers.

Silver stocks have always been tight as unlike gold the metal is consumed by industrial processes; but silver is also a precious metal which tracks gold as ‘the poor man’s’ alternative. Silver production is increasing but only at a snail’s pace.

Will silver prices again outperform gold by a factor of two as they have in the 2000s so far? It is not guaranteed but looks a fair assumption. And once stock markets have ceased to fall silver producers look an excellent buy, as will the junior gold exploration companies.

However, if this is not a tipping point for gold and silver prices then it can only be a matter of weeks or a couple of months until we reach one. Mostly likely this is it!

From the 1975 correction up to 1980 gold prices grew eight-fold and silver 20-fold – and history has a habit of repeating itself. It never is different this time…

Indeed, the highly inflationary bailouts of the banks that we are seeing today are a mirror image of the rescues that occurred after the 1974 stock market crash and the tripling of oil prices in 1973. Oil prices tripled in 12 months to $147 earlier this year. We are watching an old movie here with money supply boosts from the central banks that can have only one effect: higher inflation.