Gold and silver have just taken a little dip over the last few days. They've hit bottom (a higher low) and are now beginning to take off again.

If you're not yet in, get in. Unless gold and silver make lower lows soon (within the next two weeks according to Saville), it is unlikely gold and silver will see these current low prices again for many years.

I hope you are right. I read Saville's article on 321Gold yesterday. I'm not sure that it is the one you are referring to: http://www.321gold.com/editorials/saville/saville102406.html

I'm in silver now and am still slightly under water.

it is unlikely gold and silver will see these current low prices again for many years.

If you are correct on this, I will be able to buy the country of Croatia within two years and declare myself Emperor.

Enkidu

The FOMC announcement comes at 12:15 Denver time today, and that sometimes causes a bump. I never predict the direction on these things, but I've got a couple of traps set at $520 and $11, just in case. Very, very unlikely, but every blue moon I get one of these.

I hope you are right. I read Saville's article on 321Gold yesterday. I'm not sure that it is the one you are referring to: http://www.321gold.com/editorials/saville/saville102406.html

I'm in silver now and am still slightly under water.

If you are correct on this, I will be able to buy the country of Croatia within two years and declare myself Emperor.

Enkidu

The FOMC announcement comes at 12:15 Denver time today, and that sometimes causes a bump. I never predict the direction on these things, but I've got a couple of traps set at $520 and $11, just in case. Very, very unlikely, but every blue moon I get one of these.

Saville thinks gold and silver could still drop to new lows -- IF they do so very soon. Personally, I think -- and have thought for several weeks -- that the lows are in. I think it's up from here. Of course, there will be fluctuations.

On the Fed. Saville thinks they will not raise interest rates this time -- but might next time.

I doubt very much that gold will see $520 again for ten or twenty or thirty years. (I could be completely wrong, of course.) Silver might see $11.00 again in the near future -- but probably not.

Oil bounced up this morning, and is over $61 right now, 10:42 Denver. I've got a PDF file somewhere showing correlations among commodities. The Oil-->Gold/Silver correlation is quite high. The is a quote from a file I have in my database: "Movements in oil and gold prices are 81 percent correlated, Merrill Lynch & Co. said in a Sept. 8 report."

I still think we won't see too big a move up in Oil/Gold/Silver until after the elections. Hope that I am wrong.

I doubt very much that gold will see $520 again for ten or twenty or thirty years. (I could be completely wrong, of course.) Silver might see $11.00 again in the near future -- but probably not.

I'm sure you are right. It costs nothing to set these orders up and like I said, "every blue moon." Sometimes I put them in just so my feeling won't get hurt if the price of Gold/Silver drops and my trades-in-place drop. That way I can take solace in picking up some great prices on new trades.

Enkidu

I read the Motley Fool and can say there is a deliberate conspiracy to hold up the DJIA until the election is over. I'd say it's a good time to short it. Expect a retracement of atleast 500 points over the next 3 weeks.

Oil bounced up this morning, and is over $61 right now, 10:42 Denver. I've got a PDF file somewhere showing correlations among commodities. The Oil-->Gold/Silver correlation is quite high. The is a quote from a file I have in my database: "Movements in oil and gold prices are 81 percent correlated, Merrill Lynch & Co. said in a Sept. 8 report."

I still think we won't see too big a move up in Oil/Gold/Silver until after the elections. Hope that I am wrong.

I'm sure you are right. It costs nothing to set these orders up and like I said, "every blue moon." Sometimes I put them in just so my feeling won't get hurt if the price of Gold/Silver drops and my trades-in-place drop. That way I can take solace in picking up some great prices on new trades.

Enkidu

Yes. Having said what I said -- I am, nevertheless, simultaneously short -- though I'm mostly long. I'm short with a $8.50 silver put. I bought it when I thought there was a reasonable chance it might surprise and go down instead of up. I now think the chances of silver getting down to $8.50 again are about the same as gold getting down to $520. VERY unlikely. Still, the markets sometimes do exactly what you think they won't do. That's why I like to hedge my bets, even though it costs me some profits to do so -- a put costs me money up front. (I realize your future orders cost you nothing up front -- that's one advantage of futures trading -- though I still much prefer option trading, for many reasons.)

In fact, I hope silver and gold do go down to $8.50/$520 -- before they head back up. That way, I can profit on my silver put and lock in more long positions at still lower prices. But, as I say, I'm not expecting it.

I read the Motley Fool and can say there is a deliberate conspiracy to hold up the DJIA until the election is over. I'd say it's a good time to short it. Expect a retracement of atleast 500 points over the next 3 weeks.

You may be right, but I'll relay to you what Saville has to say most recently. He thinks the Dow won't peak until the first quarter of next year. In other words, the highs are NOT in and the election will NOT stop this move up. Any interim drops will probably bottom at about 11800 (I think that's where he said the support was -- I don't have his newsletter in front of me right now).

[color="Red"]MASSIVE GEO POLITICAL STRIFE TO BUTTRESS GOLD?

by Christopher Laird
PrudentSquirrel.com
October 25, 2006

US/Iran

The study of gold brings one to study not only economics, but the geopolitical situation. In this piece, I address this component specifically.

In the past months, I have predicted that gold would be weak, and that, by Dec 06, gold would be within $500 to $550. The gold market appears to be indicating that that is going to happen, and I am not going to recapitulate the whole discussion of many recent public articles as to why, but the gold price I predict will indeed happen – as long as there is not a major war.

However. I have always said that a major war will rocket gold a minimum of $100 from where it is today, which is about $580.

Upon following news and events on the horizon, particularly in Iraq and Iran, I believe that the West, led by the US is going to cream Iran. There are many reasons. IF this happens, you can forget my gold forecast of 500 to 550 by Dec 06. We will likely see at least $650 on the onset of that crisis within one week.

If there is no war that I am suggesting, then gold will indeed fulfill my forecast.

Why war with Iran?

The Iranian situation combined with Iraq, and the fact that these two nations are central to the Middle East oil reserves is a literal time bomb.

The US cannot allow Iraq to deteriorate into chaos. Iran is a major instigator in Iraq’s troubles. The nuclear issue with Iran is a side issue, compared to the geopolitical destabilization in the Middle East that Iran is fostering.

Israel has not acted alone - yet

Israel has stated for decades that they will not allow a radical Islamic nation to have an atomic bomb. Israel has often been willing to act alone to protect its security. Israel has not yet acted alone, but the criteria are clearly there for them to do it. Therefore, they already know the US is going to cream Iran in my estimation. The whole thing is already laid out.

In the case of Iran, the US and Israel have aligned strategic interests in defanging Iran

They will indeed attack Iran in the near future. The trouble is, Russia and China have clearly indicated that they will not allow UN actions against Iran, and not even meaningful economic sanctions. By doing so, the Security Council has effectively forced the US and Israel to act unilaterally, something Bush has not shown a hesitancy to do. Iran, mistakenly is emboldened by the Russian and Chinese support, but will run into a catastrophic war for them, and China and Russia will probably be dragged in somehow.

This is my assessment. I have not included all the details for my point of view, and reasons for this assessment, but there are many facts, such as the US naval build up in the Persian Gulf – a massive enterprise.

I believe that Bush and co are preparing, probably with at least the moral support of Israel, for a massive surprise unilateral strike on Iran.

If this happens, gold will rocket a minimum of $100 within one week of the onset of hostilities, by my estimation. In my estimation, this situation is an imminent risk.

I told my subscribers that the one thing that can propel gold now is a major new war. And, I am reasonably certain that such a thing is about to be unleashed.

If I was more certain, I would cancel my gold projection of 500 to 550 right now. I am near this point of view, but not ready to absolutely say that is my new estimation.

The Bush administration has been very good at keeping its secrets. If this war is coming our way, we will be surprised. Perhaps the only indication is of its urgency is the deterioration in Iraq and the natural impulses of the Bush administration to deal with that. And also the military / naval build up in the Gulf.

I also expect that Iran, and also China and Russia, not being fools, are already in the process of pre placing assets and so on in this field of endeavor.

Therefore, I am making a warning that the gold market could be very near a super flight to safety short term bull market in the event of a surprise attack on Iran. However, this probably will not override the overall macro environment that is downing gold if the actual attack does not happen. But if the situation becomes dire, and or if war breaks out with Iran, gold will rocket up from $100 to $200 in a few weeks time. If there is war with Iran, which will be a surprise, gold will be over $700 within one week of the inception.

If there is no war with Iran, or as long as it has not started, I expect gold to remain within my projection of $500 to $550 by December. The macro economic situation is dictating that, again, for reasons I have already elaborated in my last 4 or so public articles.

EU/Iran

Iran just directly threatened the EU.

I will include here a quote from the star struck Ahmadinejad From Iran who said last year that he was covered in a green light as he addressed a spell bound UN – according to him. What I really think will happen is that he will be bathed in a green light from the US that is not very flattering to his health – or Iran’s.

I also have to say that this US president is not a guy to play games with. He carefully gets his ducks in order and then strikes hard. Regardless of what you think of him, or whether he is right or wrong, this man Bush is not to be played with. I think he has a surprise for Iran, especially if the US congress Republicans get hammered in the Nov election. If the Republicans lose big, Bushy will act with haste to finish what he has started… I am serious. That will for sure include a plan for Iran in 07.

If he attacks Iran, what are the Democrats going to do? Not support a new war???????? No way. That is a bit tongue in cheek, but, you watch, that is what will happen. This country is not to be messed with in wars – we have a very much alive war spirit, since the very beginning of this country- that spirit is alive and well now. If we feel we have to fight, look out. Whether Bush has good reasons is another matter altogether. The fact is, a war is in the making. We will have to deal with the consequences.

Also, I am going to say this. China and Russia are not ready for total war with the US. What they actually do with us in the Middle East is another matter. People can be stupid.

Many disastrous wars have happened in the last century because of stupid leaders. We live with the results. There is nothing we can do about it.

The Middle East has roughly 2/3 of the world’s known oil reserves. Do the math. This whole situation, Iraq, Iran, Russia, China, excepting Muslim extremism possibly, is about the vital energy resources the world needs in the next 30 years.

If there is a new war, the CRB will recover, as will gold. That is the only thing on the near term horizon that I can foresee that will buttress gold. If this war does not happen, gold is going to 500 to 550 by Dec 06.

Obviously, oil will skyrocket if the war persists and we will see $100 oil at the minimum within several months.

I am not certain this war will happen, but what I have outlined are the results for Gold, Oil, and the CRB if it does happen. The CRB could rocket up 100 points within a month.

In any case, the EU is very afraid of further Muslim violence. France had on the order of 80,000 cars burned last year in Muslim insurrections, and at the same time that insurrection threatened to spread across the EU and scared the hell out of them. Muslims account for 10% of France’s population. The overall EU has similar Muslim exploding, pissed off, youthful immigrant citizens.

The bottom line is this: After Iran’s direct threats to the EU, and the fact that Iran is well known to support Muslim insurrection activity in the EU and Iraq, the EU will look the other way if the US acts unilaterally to annihilate Iran, actually will be happy about it.

Anyway, here is the quote from Iran’s religio madman President – who by the way, believes he is to personally usher in the next Muslim messiah – I am serious friends. We are not going to escape a major confrontation between the West, per se, and Iran in the coming year….And it may come soon.

[color="Navy"]Ahmadinejad Delivers Jihad Ultimatum To Europe

[color="Navy"]Iran Threatens Europe Ahead of UN Sanctions Vote For Supporting 'Terrorist' Israeli State

"We have advised the Europeans that the Americans are far away, but you are the neighbors of the nations in this region. We inform you that the nations are like an ocean that is welling up, and if a storm begins, the dimensions will not stay limited to Palestine, and you may get hurt." It was in a speech on al-Qods Day last year that Ahmadinejad declared that Israel should be "wiped from the map."

http://inbrief.threatswatch.org/

What Russia and China do in this eventuality is going to be interesting, and I have no real idea of what they already have in mind, but I do believe they already do indeed have some plan in mind, and I suspect it is not going to lead to any de escalation of a coming West/Iran War in the Middle East in 07.

The Prudent Squirrel newsletter is Chris Laird’s macro economic gold newsletter. Stop by and have a look. Subscribers are already aware of these concerns in this article.

Christopher Laird

© 2006 Christopher Laird

[color="Navy"]The latest Prudent Squirrel newsletter (last Sunday) is available as a sample for you to take a look at. In it, I had forecast gold to rise briefly to between $590 and $600 and probably not break $600. I also predicted that oil would probably not break $60. To access the sample newsletter, go to the main page and click on the flashing ‘Newsletter Sample’ button. The Prudent Squirrel Newsletter is a weekly macro economic gold analysis. Stop by and have a look.

CONTACT INFORMATION
Christopher Laird
PrudentSquirrel.com
Los Angeles, CA USA

Thanks for the Chris Laird article, James. As we know, Laird does not have a very good grasp of political reality -- or else he pretends not to. But discussing American or world foreign policy without mentioning that America is ruled by the jews turns your discussion into mostly useless mush.

Yes. I'm sure gold will jump up if world jewry decides to attack Iran and their heroic president. I happen to disagree with Laird on the short term direction of gold -- but that's all conjecture -- he might be right on that, I might be right. But any response to war will be temporary.

The real mover of gold is inflation -- or the public expectation of inflation, to be more accurate. Inflation expectation up; gold up. Inflation expectation down; gold down. That simple. Right now, the economic picture is increasingly leading the public to expect inflation -- so gold will go up. If something happens to change that expectation, gold will turn around and go down.

Giving credit where it's due for my understanding of market fundamentals -- I have been educated for a number of years by reading Steven Saville's twice a week newsletter, in which he carefully and intelligently explains all this type of stuff. I highly recommend his newsletter -- for the small price of $12/month. Well worth it.

Here's his website: http://www.speculative-investor.com/new/index.html

Any interim drops will probably bottom at about 11800 (I think that's where he said the support was -- I don't have his newsletter in front of me right now).

11800 would be the 50 day sma by the time it gets there. I'm looking for a test of the 200 sma. With RSI over 75 I expect this at least. A 1000 point drop would be a healthy one.

Of course this is all speculation on tech analysis. Nobody expected the "irrational exuberance" of 2000 either. That could happen now but I don't think the economy could support it... and despite the fact the market is NOT an indicator of the health of the economy there still has to be Leading and Lagging indicators that back up the strong market moves... and they ain't there and they won't be unless they are faked.

And I can't believe the market moved up after the Fed pussed out yesterday.

11800 would be the 50 day sma by the time it gets there. I'm looking for a test of the 200 sma. With RSI over 75 I expect this at least. A 1000 point drop would be a healthy one.

Of course this is all speculation on tech analysis. Nobody expected the "irrational exuberance" of 2000 either. That could happen now but I don't think the economy could support it... and despite the fact the market is NOT an indicator of the health of the economy there still has to be Leading and Lagging indicators that back up the strong market moves... and they ain't there and they won't be unless they are faked.

And I can't believe the market moved up after the Fed pussed out yesterday.

I didn't even find out what the Fed did yesterday. I assume it held. Saville had predicted this. He said the next decision will be the interesting one because, by then, gold and copper and the stock market will be moving up in earnest -- increasing inflationary expectations. If so, the fed may feel compelled to raise rates. That's when the stock market may drop -- probably not now. Any interim drop in the stock market, per Saville, will be limited. Stocks should continue to grind higher.