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Thread: USD/CAD at the Crossroads

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  1. #5
    Join Date
    Apr 2007
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    Default Re: USD/CAD at the Crossroads

    Tron - the following short article may be of interest to you regarding the merit of your silver Maples. He's arguing that if you use the "real" price at which silver government issued one ounce coins (silver maples and eagles) are selling, it's actually virtually neck and neck with gold year on year. Surprising, no? One does not come across much reference to that on these pages. I have not delved into it but it suggests that what appears to be the case (conventional wisdom) here should be examined carefully before assumptions are made.

    My take away is that the CAD will weaken vs. the US until the USD synthetic strength evaporates - JK has a post in NEWS just up reiterating why it remains overwhelmingly likely that the large bid on USD is all that is providing it with this continuing synthetic strength. Thereafter, the demand for USD ought to shrink very fast given the onslaught of abuse it's undergoing. So it seems to me that in a weakening currency zone you are in the cat-bird seat, because gold and silver become win-win for you. When the CAD is weakening vs. USD, you win because the gold is sharply increasing your local purchasing power.

    Then when the synthetic bid on the USD weakens drastically, gold obviously goes nuts in all currencies, and you'd win even more. For gold owners in the USD zone the gains in gold could be more muted until the dollar finally goes over the cliff. But the longer it remains apparently "paradoxically strong" as is evident now, the more rapidly it would implode when that Cinderella midnight hour arrives. So if we see six months, or a year go by and the USD is still looking "paradoxically strong", the risk is climbing that when gold and silver really bust out they would do so with lightning speed.

    _________________________________

    Silver Coins Up +20%, Dow Down -35%

    by Shelby Moore | September 29th 2008

    Three weeks ago, just a few days after I was quoted, Canadian Silver Maples dipped briefly at apmex.com to $13.41. Today I see Maples at apmex are $16.79, a +25% gain in 3 weeks. Closing at 9,258 today, the Dow has fallen -19% in 3 weeks, -28% since May, and -35% in past year. Silver Maples are roughly flat in price since May and up about +20% in past year.

    The rise in Maples, and similar rises for American Silver Eagles, Austrian Philharmonics, 90% silver coins, and other silver coins, has been due to a divergence between the price of physical coin silver and the Comex "spot" price. I documented that 90% silver (in past months) has risen from spot-$0.50 (I was buying) to now spot+$4 for roughly +35% price gain, if you can even find any for sale.

    I have observed similar price rises at all major dealers. I have on numerous occasions tried to warn paper silver "owners" (e.g. SLV, CEF, Perth Mint, bank silver certificates), they may never again get full physical price, if the price of physical coin silver continues to run away from spot price as I and others predicted.

    Today, 1000oz bars are still available near spot, but there is a theory based on some official data and anecdotal evidence tha t the supply of these bars is limited and will dry up soon in a Comex and/or general paper silver default.

    Canadian Gold Maples at apmex (and similarly for Gold Eagles and at other dealers) have risen +16% in past 3 weeks, roughly flat since May, and up +23% in past year. With the spot gold-to-silver price ratio currently at 76, the Gold Maple to Silver Maple price ratio is 56, flat since May and past year, and improving from 61 in past 3 weeks.

    I did predict this in my March, 2007 article "Silver Will Outperform Gold When Fiat Dies". I have also documented with official data that silver bullion is more rare than gold bullion.

    From the examples above, I hope you can see why I see the need for a new market price tracking mechanism, which I have begun working on, so we can document the true prices of gold and silver bullion, to produce charts that agree with reality. What use is charting, if we are using "spot" data which does not reflect reality?

    Some argue that the Dow will bounce back. We may get dead-cat rallies on the way down, but the Dow Theory has confirmed a shift to long-term (secular) bear market. The central banks appear to be hyperinflating (e.g. Fed Total Money), so all things might rise or fall less than they would in dollar value, but everything else will just get that much more expensive in dollars, with the net effect being the same implosion of real value (purchasing power) for everything except the anti-fiats (gold and especially silver).
    Last edited by Contemptuous; 10-09-08 at 10:15 PM.

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