March 1, 2012
James M. Carrillo
Yesterday's sharp selloff in Precious Metals was month end profit taking and fueled by Bernanke's statements that more QE is on hold. His statement fueled the selloff in paper markets, however demand for physical Precious Metals has remained strong. Fundamentally, there is no reason to exit the Precious Metals markets regardless of future QE or not, the damage has already been done and as stated many times over the years, there is a lag between cause and effect. The Cause of impending consumer price increases and our cost of living is due to monetary inflation. We have barely seen the full effect of this because there is currently more concern for the Eurozone for the time being. This is causing European Corporations to park there monies in US Dollars for the short term. When they pull the funds out of US Dollars (and they will) the dollar will begin to see the effect of the massive printing of dollars. In order to illustrate you will see the dollar has been flat while Euro Corporations have been parking (buying) massive amounts of US Dollars, this should have caused the Dollar to explode upward due to demand, it did NOT.
The reason the dollar did NOT go up is that the Fed is simultaneously infusing dollars into the system. This keeps the lid on any currency increase as the Euro's buy our dollars. The cause for a further massive decline in the dollar is the sheer magnitude of the dollars our country has added to the system. The most in history. It is only a matter of time that you will see the effect of all of these dollars in your cost of living and future buying power.
It can be said that you can turn this chart upside down to see the future value or buying power of our US Dollar!
Gold's major bull trend is fully intact! According to technical analysis it appears the next objective is $2,300.00.
The title of the article is BREAKOUT!? Why? Because we potentially have a major breakout in Silver prices despite yesterdays sharp sell off, we have broken slightly above the major monthly moving averages. Also, if we get above 38.00 by the end of March we will have firm confirmation of a major breakout and could see $50.00 very rapidly. It should exceed $65.00 to $70.00 by first quarter 2013 at the latest. Note that the last major buy signal based on a break of long term moving averages was in Q2 of 2009, prices tripled over the following two years!
Inflation is where we are headed, by choice. The Fed is engaged in a program to inflate its way out of this mess. Look at your cost of living, is it increasing? Look at your savings rate, is it lower than the rate of your increasing cost of living? That is the trend, it won't be changing for many years. Precious Metals will be the best place for your savings over the coming years as they have been in the past decade. Dollars will be the worst place to have your hard earned savings and retirement accounts. BUY PRECIOUS METALS and enjoy the ride until interest rates exceed the true rate of inflation, many years from now.