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I was wrong about a correctionBob Moriarty On December 12th I posted a piece saying gold and silver were topping. Gold immediately plummeted $50 to $492 in ten days. Then I wrote a piece calling for a dead cat bounce which might even test the old highs. Gold promptly shot right back up to $540. Thinking three was a charm, I then posted a piece saying gold was going to go down after the dead cat bounce. Three is not a charm. (But that hat sure tasted good). Gold took a $6 dump for one day and has done nothing but go up ever since. So what's the story? Gold was due for a correction and from the looks of it, it was short and brutal if that was all we get. I'm still of a mind that gold is due a correction but it keeps rocketing higher. Bill Fleckenstein says it's China. And if it is, the dollar is toast and gold is going a lot higher. Every gold bug wants to ask his favorite GURU how high gold is going up and most of the gold gurus fall into exactly the same trap. They forget gold can't change its value. An ounce of gold is worth an ounce of gold. It's not gold which changes its value, it's the dollar which is dropping. The dollar changes its value every day and has done so ever since August 15 of 1971 when Nixon took the US off the gold standard. Gold can't change its price but the dollar can go to zero. Here's the real answer and the reason Dr. Marc Faber uses what seems to be such an outrageous figure for where he says gold might go. Imagine for a minute that the United States wanted to start all over financially. Say we took all the gold in Ft. Knox and under the New York Fed and in West Point (if it still exists at all). Take all the gold, all 256,000,000 ounces and revalue it to a figure high enough to pay off the true debt of the United States today. Go ahead, work the number out yourself, if I gave it to you, you would never believe it. And by the way the debt today on a cash basis is $51 trillion. Divide $51 trillion by 256 million ounces. If you insist on a dollar value for gold, that's a reasonable number. Do it yourself. I have been exceptionally concerned about the rise in gold because it could just as easily be hot money chasing security in case we use atomic bombs in Iran in an effort to make sure they cannot defend themselves against Israel. We all know and accept that in the Middle East the only country which possesses WMD is Israel. And it's Israel goading the US first into attacking Iraq and now threatening Syria and Iran. Face it, as an American, if you feel threatened by Syria or Iraq or Iran, you are certifiable. We aren't threatened and never have been. And no one else in the neighborhood is threatened. But Israel feels threatened and through either bribery or simple blackmail, Israel controls the United States government and indeed, brags about it. Why shouldn't you be proud of the power you hold? Israel is and commands the obedience of Hillary Clinton and John Kerry just as much as that of George Bush. If we allow Israel to goad us into using atomic bombs against Iran, not only are we going to lose the war, it will be the very destruction of the United States of America. And don't believe in the "nuclear bunker busters" crap the Pentagon is trying to spin. A bunker is a hole in the ground. You cannot destroy a bunker by digging a hole in the ground. Even a giant hole in the ground filled with the blood of hundreds of thousands of innocent people. A nuclear bunker buster is an atomic bomb. The F-16s of Israel lack the range to attack Iran with conventional weapons. And the Bush administration has pretty much wiped out our ground attack capability in the target range that Iraq has become. Iran has spread out their nuclear work over 300 facilities and we simply cannot destroy them without the murder of millions of people. Both the Chinese and the Russians have a vested interest in Iran. If the nuclear facilities get nuked by either Israel or the US, the first guy killed is going to be a Russian. That's a really really bad idea, almost a world class bad idea. But the Chinese want energy from Iran and they don't want the high test brand which glows in the dark. So don't for a minute believe the Chinese are going to let the Likud party and their agents in the US government pull another 'Iraq' on the world. It makes all the sense in the world for the Chinese to resist the pressure of US domination in the same way that the actions of our government have moved voters to vote into power more radical governments all the way from Iran to Venezuela to Bolivia to Chile. The rest of the world is getting very tired of a rogue nation totally out of control. So it's possible that we nuke Iran and just as possible that China or Russia or Hong Kong or Japan decides enough is enough and yanks the financial rug out from under the United States. As I have made it clear for 4 1/2 years now, we are in a gold bull market and a dollar bear market . This administration is hell bent on the destruction of the dollar. Perhaps the day has come. No one lost money taking action on what I said but people may well have taken money off the table that now they wish they hadn't. I'm sorry, but we did the same thing and I said what I believe. Now I'm hoping for a correction because the alternative may be horrible. But in any case, you need to have a game plan. Do what makes sense to you. If you want to believe gold is going up for eight days in a row and then corrects for a day and then goes up for another eight days in a row, it might happen. Someone is buying, not $50 a day but $5 and $10 a day which they might do for a long time. If Bush has finally destroyed the dollar, all bets are off and no one can predict price action. Bob Moriarty 321gold Inc |
