Wednesday, September 29, 2010

$22 Silver - $1,300 Gold

It appears more and more investors around the world are putting the pieces together on how the story will end.

The big money is moving hard into precious metals and they are devouring the limited supply of physical metal.

The government announced over the weekend that they have run out of buffalo gold coins.  This coincides with announcements earlier in the year that they had run out of eagle coins.

The buffalo gold coins sell for about 20% over the spot price and last sold for $1,560.  At these prices investors ravaged every last coin available.

Announcements have come from dealers around the world that they must shut down operations due to all supply being non-existent.

Remember, the is only the first round of buyers entering the market: the ultra rich who move in first.

Next will come the hedge funds, pension funds, and mutual funds.  The public will come in last.  During the last bull market in the 1970's, 10% of the global community participated.

This time 100% percent of the world will participate. 

This is also the first time we have experienced a bull market where the commercial banks (JP Morgan, Bank of America) are heavily short the market.  It was the opposite during the housing boom where these banks bought every mortgage they could get their hands on.  Same for the dot.com boom where they participated in every IPO they could bring to the market.

At some point, as prices move higher, these banks will have to cover their shorts and buy back the metal.

Then the public will arrive for the grand finale.

Expect massive pull backs along the way.  Use this opportunity to add to your position.

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