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Gold Will Seize The Day

Commodities / Gold and Silver 2011 Jan 19, 2011 - 01:23 AM GMT

By: Anthony_J_Stills


Best Financial Markets Analysis ArticleMonday was a holiday in the United States, Martin Luther King’s birthday, and I thought it would be appropriate to review some of what the man had to say. The first is an excerpt from his famous “I Have a Dream” speech:

“Let us not wallow in the valley of despair, I say to you today, my friends.

And so even though we face the difficulties of today and tomorrow, I still have a dream. It is a dream deeply rooted in the American dream.

I have a dream that one day this nation will rise up and live out the true meaning of its creed: "We hold these truths to be self-evident, that all men are created equal."

I have a dream that one day on the red hills of Georgia, the sons of former slaves and the sons of former slave owners will be able to sit down together at the table of brotherhood.

I have a dream that one day even the state of Mississippi, a state sweltering with the heat of injustice, sweltering with the heat of oppression, will be transformed into an oasis of freedom and justice.

I have a dream that my four little children will one day live in a nation where they will not be judged by the color of their skin but by the content of their character.

I have a dream today!

I have a dream that one day, down in Alabama, with its vicious racists, with its governor having his lips dripping with the words of "interposition" and "nullification" -- one day right there in Alabama little black boys and black girls will be able to join hands with little white boys and white girls as sisters and brothers.

I have a dream today!

I have a dream that one day every valley shall be exalted, and every hill and mountain shall be made low, the rough places will be made plain, and the crooked places will be made straight; "and the glory of the Lord shall be revealed and all flesh shall see it together."²

This is our hope, and this is the faith that I go back to the South with.

With this faith, we will be able to hew out of the mountain of despair a stone of hope. With this faith, we will be able to transform the jangling discords of our nation into a beautiful symphony of brotherhood. With this faith, we will be able to work together, to pray together, to struggle together, to go to jail together, to stand up for freedom together, knowing that we will be free one day.”

I think part of the problem in today’s world is that we don’t have any dreams, or better yet our dream is of receiving something for nothing. King new that sacrifices had to be made in order to advance and he made them. This next piece is from his “I See the Promise Land” speech:

“And they were telling me, now it doesn't matter now. It really doesn't matter what happens now. I left Atlanta this morning, and as we got started on the plane, there were six of us, the pilot said over the public address system, "We are sorry for the delay, but we have Dr. Martin Luther King on the plane. And to be sure that all of the bags were checked, and to be sure that nothing would be wrong with the plane, we had to check out everything carefully. And we've had the plane protected and guarded all night."

And then I got into Memphis. And some began to say that threats, or talk about the threats that were out. What would happen to me from some of our sick white brothers?

Well, I don't know what will happen now. We've got some difficult days ahead. But it doesn't matter with me now. Because I've been to the mountaintop. And I don't mind. Like anybody, I would like to live a long life. Longevity has its place. But I'm not concerned about that now. I just want to do God's will. And He's allowed me to go up to the mountain. And I've looked over. And I've seen the promised land. I may not get there with you. But I want you to know tonight, that we, as a people will get to the promised land. And I'm happy, tonight. I'm not worried about anything. I'm not fearing any man. Mine eyes have seen the glory of the coming of the Lord.”

He gave this speech the night before he died, and he knew he was going to die. Martin Luther King was not a perfect man, there is no such thing, but he advanced a whole people and he was willing to sacrifice everything. With what’s coming down the road the United States will need people like him if they hope to save the day. So far I see no Martin Luther King’s or Robert Kennedy’s on the horizon.

With that said I want to look at the markets, and in particular I want to look at the US dollar because it epitomizes what’s wrong with the US. You have a very small group of very powerful unelected officials who are allowed to create unknown amounts of wealth out of nothing and give it to friends and supporters. They answer to no one and they are not held accountable for their actions. The Chairman of the Federal Reserve has gone so far as to say that the American people don’t have a need to know. Over the long run it is very difficult to fool the market, especially with the Internet and the fact that we now have a global market that trades twenty-four hours a day. That’s why the US dollar has been declining for months even as the Fed insists it has a strong dollar policy. Take a look at the following chart and you’ll see what I mean:

The decline from 88.50 began months ago and recently went through a period of distribution as it danced on both sides of a neckline at 80.16 formed by a large head-and-shoulders formation.

Late last week the spot US dollar broke back below that neckline and today is down another .45 at 78.88 and it has now fallen below the range it was distributing in. This was to be expected and I now look for the dollar to test support from the trend line I have drawn in below:

As timing goes it couldn’t be worse since the break down corresponds with the visit of the Chinese Prime Minister to the United States and the dollar will be a hot topic of conversation. The Chinese hold more US debt than anyone else and I have maintained for months that when this trend line is broken, the Chinese will begin to dump that debt regardless of the consequences. Then all bets are off.

The fact that the United States has chosen to destroy their own currency instead of living within their means is the main reason why I remain so bullish on gold. There are only three things that can act as a store on value in today’s world: gold, silver and the Swiss Franc in that order. You have the Europeans going down the same road as the United States so the rest of the world will push gold’s price higher:

That’s why gold’s secondary trend has been methodically working its way higher for twenty-six months as you can see in the previous chart, and that’s why it will continue to work higher. You can see occasional periods of sideways movement where gold is accumulated in anticipation of the next move higher. That’s what’s happening now as gold is being accumulated on each and every dip in anticipation of a move up to 1,596.90. Silver will follow and so will the Franc, and I might add that the latter just happens to be rallying in every major currency.

There is a lot of talk about bubbles but gold is a long, long way from being in a bubble. Go out for a walk and knock on ten peoples door and ask if they own gold. They won’t have a clue as to what you’re talking about! In a bubble you’re neighbors will go out of their way to tell you that they own gold. The other thing you need to know is that gold is a manipulated market and that makes for some difficult days. Last week we saw the metal behave in an uncharacteristic fashion as it was pressured down in spite of a declining dollar and rising commodities prices, and we can see them try to cap the price today. Most traders find that discouraging but I look at it differently. I see it as the manipulators putting money in my pocket because sooner or later the primary trend will fully express itself, and it will include a bonus due to the manipulation. My best advice is not to hang on every dip and rise. Take your position and just stick with it. You will win in the end.

Anthony J. Stills / Steve Betts

© 2011 Copyright Anthony J. Stills - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


M. Isaac
19 Jan 11, 19:25
Swiss franc

Your comment about the Swiss franc being the only currency which holds value is partially true due to people's perceptions of the franc.

There is one currency that is much more solid, the Norwegian kroner. Norway is the probably the wealthiest country on Earth.

It has the second largest sovereign wealth fund in the world; only Saudi Arabia has a larger one. Norway has zero foreign debt, a current account surplus equal to 10% of it's GDP and a whopping budget surplus almost the same. Also Norway doesn't have broke banks like Switzerland. UBS alone could topple Switzerland.

So I would change your comment to gold, silver and the Norwegian kroner.

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