April 5, 2006
Nikkei: 17,243.98
*April 2003 low: 7,603.76
*- See March 31, May 3, & May 30, 2003 reports linked on homepage.
The following are the Precious Metals and Dollar excerpts from the April 2006 issue of the Sid Klein Comment (SKC), which is available in its entirety via www.sidklein.com. The full SKC report is uploaded at www.sidklein.com, on a six-month lag.
PRECIOUS METALS & DOLLAR:
From the February 5, 2006 report:
"Since gold broke out of a contracting triangle above $440, a wave three of three for this move is completing, which should result in the entire move's completion in the $600 area, by quarter-end. Meanwhile, due to momentum, a wave-four correction should be contained by $540."
As we can see from the chart below, and according to the blue-highlighted excerpt above, SKC again identified a perfect top in the price of gold, while forecasting a subsequent low that was barely breached, as gold fell into the Elliott Wave interpretation that was provided. This week's move to just under $600 confirms that the analysis in February's report was accurate, from top to bottom, and right up to this level. Traders may be temporarily out of gold, as per February's forecast, though investor's should not change anything in their asset allocation.
From the March 5, 2006 report: "After having identified the low in the $410 area earlier in 2005, the fourth quarter's low at $455 was forecast within $1.00. As well, $500 by yearend was the reiterated market forecast in these pages. These forecasts followed three years of prognoses that were globally unsurpassed, for the timing of key turning points in gold (Gold excerpts summary)."
The following chart reflects the analyses and forecasts above:
The currency commentary begins with a quote from Ludwig von Mises, which I took from the Bullion Buzz March 7, 2006 letter. It replies well to the Weimar/Argentina "bullish" argument:
"There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved."
Important messages and analyses are contained above in the New York section. There, an indication appears that the conclusion of a bullish consideration for US equities would be continued in the currency section.
The "bullish" equity scenario exists within an otherwise financially apocalyptic situation that calls for printing so much currency-debasing money, that it has to have much of it flow into equities. Above, I expose that as a silly notion, but add that an alternative exists, which would allow the Fed's and US government's plan(?) to succeed:
Canada presently is governed by a minority government, but one that is headed by an extremist neo-con, who is truly learning the con game well. He has been well coached and, according to Al Gore, is being well funded by those with whom he seeks to unite.
Via NAFTA, the US has taken much of Canada's sovereignty. According to a NAFTA ruling that is consistent with the deal that Mulroney struck (neo-con who introduced the "trade deal" in the early nineties), the US owes Canada $5 billion for illegal lumber tariffs. The US has refused to pay, claiming that the discrepancy between the currencies is a form of subsidy. Canada has not left NAFTA despite this, as the economy is in the grips of the US government's will, as a result of the deal's effects.
Canada's economy has been crippled by an advancing currency, which propaganda claims to be caused by high energy prices. The latter has largely benefited foreign oil concerns. The large move up in the Canadian Dollar is due to financial imperialism, as the US debases its currency. The US plans staggering new currency printing, as it is unconcerned about its value versus other countries.
The plan may simply be to continue to move the Canadian dollar toward par, even though our economy and national wealth has only been deteriorating since NAFTA's inception, in real terms. Then, the US would propose a common trade zone and currency. This would be used to create a new piece of paper, while securing still further all of Canada's resources, and destroying her political influence altogether at the same time.
By achieving the latter, the US would be aiming to succeed at a plan to debase its currency, until there is no more debt (coupled with the new North American currency, the acquisition of new rights and resources, etc.).
Under such a scenario, US expansion would feed off this country's resources and what it has to offer US citizens, as a larger expanse in which to live [State television (CNN) has already aired propaganda that the US is running out of living space]). Simply, this would be the modernized version of Weimar (print and replace with a new currency, which includes Canada and Mexico), along with the story of the need for "living space". This is the "bullish" scenario.
Otherwise, as described in the New York section above, our recent presentations of the bullish equity scenario (money printing takes stocks to new highs even as the currency is debased, a la Weimar and Argentina) is just a bunch of hooey. Unlike Germany, the US can annex its neighbors and secure the needed resources, while attempting to thereby resolve its currency crisis. In that sense, most frighteningly, this time may be different.
Hey, Mike Moore, are you getting all this?
On Donald Dross and competitor envy:
Donald Dross broke the story that the silver ETF could be backed by Warren Buffet's silver holdings that would be held on consignment (http://www.gold-eagle.com/editorials_05/dross022806.html). The idea, in brief, would be that the discount in silver would thus be removed (which is happening), while providing greater market liquidity and the opportunity for Buffet to sell his silver whenever he felt like it in the future, at whatever prices he wished to sell it at.
Okay, some folks didn't understand the perfectly written piece right away, but more fascinating has been the reaction of other letter writers who initially scoffed at the logic their mighty minds could not grasp, only to later espouse the idea. It's okay to be wrong or right, but being petty or without class should be enough to cost anyone their credibility. Humility is a sign of intelligence, boys.
Finally, Donald followed up with a piece on CZN (http://www.gold-eagle.com/editorials_05/dross032406.html). Within less than two weeks the stock rallied 30%. Based on his report, that's nothing, for the long term holder.
CONCLUSION:
Asset allocation remains 50% gold, 25% Swiss Franc and 25% Japanese Yen. Regarding wealth asset allocation, it is fine to maintain 40% gold and 10% silver. Silver's timing continues to coincide with that of silver's. So, as per February's forecast of a short term peak in the metal, ensuing price low and subsequent rally toward $600 for quarter-end in gold - for trading positions - one may be out of the precious metals.
As you can see from the red-bolded link above, SKC remains the world's premier source for precious metals timing, since January 2002. Merely trading and investing in the metals has paid all the bills, Readers are well informed. Investors are well-paid!
Sid Klein
On this 5th day of April, 2006, Mr. Sidney Klein has donated this market letter to the public domain.
DISCLAIMER: This market letter is intended to assist in the dissemination of information to private subscribers. The information contained herein represents Mr. Klein's best efforts in good faith to advance knowledge to his clientele, but there can be no implied guarantee as to its accuracy or completeness. The information is given as of the date appearing on this market letter, and Mr. Klein assumes no obligation to update the information or advise on further developments relating to the information provided herein. No solicitation to buy or sell securities is intended, and none should be inferred. Investments are inherently risky, but investment risk itself is a function of individual preferences. Thus any opinions, recommendations, or judgments expressed in this market letter are of necessity abstract and general. They must be modified, accepted, or rejected by individual subscriber/investors whose risk averseness cannot be known to Mr. Klein.