Don StottI sat back and thought about it the other day. What expression do I use more than any other, during my business day. I have decided it is "I dunno." The reason I use that, is because I do not know! Don't get me wrong; I love to talk on the phone. I do it all day long. I quote prices, commissions, spreads, delivery time, weights, measures, dates, supply, etc, and do it all day long. I even write an occasional order. But when queried about lots of things, I must say, "don't know, "haven't the slightest idea,", or "beats me," even.
Questions such as, "When are we going to have a correction?" "How deep will the pullback be?" "When's gold going to get to $500?" "$600?" When's silver going to hit $10?" "When's the crash coming?" "How low will it go?" "How high will it go?" "When will the ratios go back to 16 to 1?" No one has yet asked me if there really is a Santa Claus, or how high is up. I don't blame people for asking me about the future, but my crystal ball broke yesterday. I haven't the foggiest idea of what prices will be tomorrow, next week, or next month. I do believe very firmly, that prices in dollars for gold and silver will be much higher a year from now, and even six months from now; but tomorrow? Not me.
The world's full of liars and cheats. There are hundreds of "boiler rooms" around the world, and these guys, usually sitting in cubicles, love to tell everyone they call (and annoy) that real estate in Sunny Valley will go through the roof, or that GM stock will go to $30. Salesmen by the thousands sell condos, time shares, mutual funds, stocks, and yes…gold and silver. There are the sales creeps who love to say they represent the local police force, or fire department, and need memberships. Phooey! These are merely paid solicitors, who live a thousand miles away, so don't fall for that one. I call them "used car salesmen." Hey mister, this nice little Chevy has low miles on it and was owned and driven by a little old lady, who only took it out on Sundays." To the drag strip?
Anyone who "knows" that gold or silver prices will be higher tomorrow or next week, is simply a liar, and will say anything to make a sale. Same with real estate, or any other thing sold by bums who call you on the phone. If someone calls you to sell you something, you'd better believe that he could care less about you, and completely about his commission. These solicitors have to make sales, or they either get fired or go further in the hole than they already are, probably. When I first began doing this, way back in November of 1977, the fellow who owned the firm said to me, "Well, here's a desk and a phone, so start calling people." "Not me Sherman." (That was his real name.) I decided to write letters, and start a newsletter. I used to use funny editorial cartoons, quotes from reliable people, and in Phoenix where I was, I even reviewed films and restaurants. Lots of fun! I sent these to people I knew, or to names I was given, as prospects. Never called a single one. People don't like to be bothered by sales people calling them. If they wanted something, after reading my stuff, they called me. They did! By the time I left the outfit March 1st, 1980, my previous month's check was over $16,000! That would be probably $50,000 in 2005 dollars. I quit. Everyone thought I was nuts. I wasn't. I knew the outfit was going to go down, and a lot of people were going to jail. It all happened a year after I left. I never called a single person in the three and a half years I was there.
So getting back to "I dunno." I do get a lot of gossip about economics, and I am always glad to pass this along, but can't guarantee its accuracy. As an example, I have heard that the COMEX has record delivery orders for silver contracts. Delivery orders, which almost match what silver they have left in their vaults. I hear they are woefully short of silver for the delivery orders, and that this may make silver go through the roof. True? I don't know, but it sounds reasonable to me. Richard Russell believes that gold and the Dow will cross at 3,000. No one knows, of course, but it sounds reasonable to me. I predicted that we would have $500 gold by Jan 1st, and was off by a month. I predict that we will have $10 silver by end of January, but I dunno for sure. It's only a prediction.
I do feel extremely sorry for those who have played the futures market. If you bought a silver contract Monday, Dec 12th at $9.10, and I am certain many did, Wednesday, silver was down seventy cents! Those people had margin calls to end all margin calls. Did it break some? Maybe. While my safe's contents went down by seventy cents an ounce, I didn't worry. No margin calls on physical. Gold went from $537.50 down to $506 on Wednesday, at one point. That's a $31.50 decrease, and a marvelous buying opportunity! For those who play the futures market, it was an undoubted disaster. They had to pay up the margin calls, and didn't have a single ounce of gold or silver to show for it. Just pieces of paper and phone calls from the futures broker. I do not understand why people do insist on playing the futures market.
If I did have a crystal ball, and it worked, I could have easily told people on Monday, not to buy until Wednesday! I could have told those futures boobs, to get out on Monday, because on Tuesday it was going to fall out of bed, and go down further on Wednesday. I couldn't, because there is no way of knowing what will happen tomorrow. There are crystal ball gazers or forward viewers who say that Seattle will be swept away and the Space Needle destroyed by a tsunami in 2007. Hundreds of thousands of deaths? Maybe you should move out of Seattle! Or consider it for what it is, and that's a fool's utterance or prognostication.
If you are a Bible scholar even, remember that Jesus' Apostles and Disciples thought his kingdom was coming in their day. They couldn't wait! That was 2,000 years ago, and we're still waiting. Edgar Casey has made some very remarkable predictions about the earth. Thirty of them, and they are scary. Will they happen? How about Planet X? Is there such a thing? Who can possibly foretell the future? There are people out there, who undoubtedly have a bit of mysticism about them. I went to an astrologer once, and gave her my birth date and nothing more. She had never seen me before, and she painted a picture of me that was so accurate, that it made me shudder. Can an astrologer foretell the future? If you think so, ask one when gold and silver will pull back! Might make you a lot of money.
But in the mean time, I will give a few predictions, which are guaranteed not to be right. I predict that silver will be $10 by the end of January, and that the ratios will eventually return to 16 to 1, which makes silver a lot better buy than gold, if you have a lot of time and place to store it. Some predict that palladium will go up fast, and I bought ten ounces Tuesday for myself. Wednesday, it went down further, so see, I can't predict anything. "I dunno." I may not, but I do practice what I preach. I think gold will be $600 by the end of 2006, and silver $20. I am probably wildly off, but its fun to make predictions. Here's how far off people in the know can be. My traders and big wheels at my supplier, and my wife and I had dinner together this spring, and over dinner I asked each of them what gold would be at the end of 2005. I said $500, and every single one of them said it would be from lower to a lot lower. These guys do millions of dollars a day in trades. The point is that no one knows, or as I say, "I dunno."
No column next week. I've got to get ready for Santa. Merry Christmas, NOT 'happy holidays' to you all. If those 'happy holiday' fools knew anything, they would know that the word "holiday" comes from the two words "holy day." Isn't that what Christmas is supposed to be? Protect yourself.
December 15, 2005
Don Stott has been a precious metals dealer since 1977, has written five books, hundreds of columns, and his web site is www.coloradogold.com
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