Gold, Silver & A New Super-Major Bull Market

James Dines:  “Remember, gold moves on its own cycle.  It has come down with the whole raw materials crash in China, and it’s dragged down every single raw material including rare earths, uranium, everything.  But gold is different.  Curiously enough we have been getting an upturn in some of these rare earths and uraniums.  They seem to be moving together for some reason.  The answer to that is probably somewhere deep in mass psychology. 

But the most important thing to remember about the geopolitical situation is that gold is a hedge against two things:  Currency debasement, in other words too much printing of phony paper money, and also geopolitical fears....

“And that’s happening in the Middle-East.  That’s expressing itself in Egypt right now.  The violence is going to get much worse.  And of course whenever there is trouble around the Suez Canal, the prices of oil and shoots up.  Why?  Because the people in those areas are uncertain about their currencies -- will they be there tomorrow?

So they swing their money into gold, and to some extent silver.  That’s what’s happening now.  Gold will move generally, but not precisely, against or opposite the stock market -- not every day but generally. 

The Dines ‘Wolf Pack’ theory says that groups of similar economic backgrounds tend to move together.  You will note that all of the metals tend to move together -- gold, silver, platinum, and palladium.  We flashed a buy signal on gold again recently, and we think they (the metals) look higher.

It depends on whether there will be peace in the Middle-East or what’s going to happen.  The area is in turmoil.  It’s historic.  The area is seething, and worse than that there is an eery collection of coincidences relating back to the 1930s.  (As an example) the popularity of Superman is an interesting resurgence.

You are also getting a re-militarization of the Far-East.  Japan, India, and the Philippines have just announced aircraft carriers to counter the aggressiveness of China.  China is still screaming for revenge for Nanking.  That area looks like a war (is coming).

So it looks like the 1930s, the rebuilding of navies -- all of this is so typical of what led up to World War II.  That of course would be very bullish for gold.  In addition to that, you also had the Fed running the printing presses like crazy during the 1930s.  That’s when this generation of economists got locked into the idea that running the printing presses and printing crazy amounts of money and going ever deeper into debt really got started.

Not many people realize that Franklin Delano Roosevelt raised the price of gold in the 1930s, and I think that was one of the key reasons there was a recovery.  But even in the 1930s, the unemployment problem was not solved until after World War II started and a lot of the population moved into the military.

Fed-head Bernanke is out of control.  Bernanke is still overspending and over-borrowing to boost the economy -- frantic, fanatical, undeterred by six straight years of spending and increasing debt.  (He has) utterly failed to increase the number of paying jobs, and still insists that even more will help.”

Full audio interview at KWN

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