The dollar is still hovering around the 96 level and gold/silver couldn’t get anything going today. The stock market was higher but it didn’t take the gold and silver mining stocks with it. That is not a good sign for the precious metals. If the dollar continues to move higher then we should see gold and silver begin their next leg down and this dead cat bounce will be over with. What a lousy bounce it was if that’s the case.
Supplies are coming back in line for gold and silver now and the phone hasn’t been ringing as much which tells me maybe we do get a move down from here. Interest rates ticked up a bit today too which is also a negative for gold.
Part of what I am writing about in my next book has to do with retirement and the pensions one will receive during their lifetime. Whether it is a strong company you have worked for your entire life or maybe the government, The problem is, the money has to be there for the income stream to be secure. What happens if your secure stream of income comes from what was a strong industry, but now is now? This is the case with auto workers in Detroit where benefits have been reduced along with payouts. It is also occurring with our government where even Social Security is now being delayed a few years for some if they were born before a certain year.
The following article is for me a sign of things to come. Illinois has a state lottery where some of the funds are used for schools and other programs in the state. Some of the money goes to winners who rely on the state to pay them as agreed upon. Recently however, if you won over $25,000 from the state lottery, you are not getting paid anything at present because the state comptroller who cuts the check has to get permission to release the funds from lawmakers who have not yet passed the state budget.
While this is an example that will eventually lead to the lottery winners receiving their winnings, it does give one the illusion that they are in control of their retirement when in fact they are not. It’s the one’s who cut the checks that are in control and technically they can change the rules on you at any point in time. I see this type of issue becoming more of a problem as the baby boomer generation retires and the funds available to pay them get smaller not just from a state level, but from a federal level. At least from a federal level there can be some allocation of funds that Congress can provide or there is the Pension Benefit Guarantee Association, but it too was struggling with its own debt during the last crisis. It won’t survive the next crisis. Neither will the Fed with it’s balance sheet of unwanted assets.
But before any of these types of things begin to occur, we’ll see the Fed take drastic steps to fight the deflation that is still contracting, even though today we are seeing some signs of life in the economy. For now, I see the stock market moving higher and gold and silver falling and we just have to be patient for a b it longer. Gold and silver will have their day. It’s not a question of “if.”
Doug Eberhardt is a 28 year financial services veteran and precious metals broker selling gold and silver at 1% over wholesale cost. Doug has written a book to help investors understand how gold and silver fit into a diversified portfolio, how to buy gold and silver, and what metals to buy. The book; “Buy Gold and Silver Safely” is available by clicking here Contact phone number for Buy Gold and Silver Safely is 888-604-6534
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