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« Kinross Gold Corporation: Update | Main | Gold Prices: After Labor Day! »

Precious Metals: The only refuge

My father spent six of his younger years in the Royal Marine Commandos serving his country throughout the Second World War. The military discipline stayed with him for the rest of his life and some of it rubbed off on us, his children. For instance we could never buy anything unless we could pay for it with cash. What would he think now if he could listen to both the President George Bush and the Federal Reserve Chairman, Ben Bernanke?

The President stated yesterday that the borrowers who were in trouble would be helped by insuring their mortgages through the Federal Housing Administration while Ben Bernanke assured the stock market that the Federal reserve would “act as needed” to prevent this financial crisis from having a knock on effect on the national economy.

We now have a drunk who cannot pay his bar bill so the solution is to insure the drunks debts and to extend credit to the bar owner! Magic! Life without responsibility or accountability, Utopia!

Our drunk or credit junkie can now dig the hole that he is in even deeper making recovery more difficult than it is today as the debt will be bigger later on. There is also the expectation that someone else will come to his rescue, as it’s not actually his problem but the state's problem.

The US government has given a painkiller to a drunk who is all out of cash at the same time they have extended the drinking hours at the ‘Bar Wall Street’. Tomorrow morning will dawn as always and the hangover will be almost terminal.

US Dollar Devaluation 01sep07

The next fix will come on the 18th September when the Federal Open Market Committee (FOMC) meet and proclaim ‘what inflation?...the economy is in great shape so lets have a rate cut
This next rate cut could well be the final nail in the coffin of the once mighty US Dollar. Why maintain it above the psychological level of ‘80’ anyway. Well the eyes of the world are upon the US Dollar, the stop loss orders are in place and safe heavens are being sort. One of which will be in the robust arms of the precious metals market sector. The stage is set and the starting gun is cocked, so prepare to be swamped by ex-property barons, fallen high-tech gurus and refugees from all corners of the financial markets as the tremors of financial destruction commence.

Gold has been telling us for sometime that all is not well so listen up and put at least a small part of your wealth into precious metals or their associated stocks. Discipline is about to return to a screen near you.

The chart below depicts the demise of the US Dollar:

The US Dollar 01sep07

The Chart below depicts the robustness of Gold:

Gold Chart 01sep07

Its your call!

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