Gold & Silver Stealth

February 16, 2007

Gold is quietly on the verge of breaking out in all major currencys, after the all-out assault on the oil price left gold unscathed. Gold is the strongest performing among all the commodity items. Critical factors for the rise in the gold price are:

  • The Bank of Japan has been compromised politically and will permit continued funding the global Yen Carry Trade.
  • The Euro Central Bank has not finished with its interest rate hikes, sure to aid the rise in the euro currency.
  • Housing has crippled US Federal Reserve policy, unable to defend the USDollar.
  • A bank crisis worse than the 1989 Savings & Loan debacle is in progress, sure to see infection to the general banking system. The USFed and Dept of Treasury are laundering mortgage bonds illicitly, without 98.69% probability.
  • China will invest its $1 trillion in FOREX reserves, sure to include commodity stockpiles and additions to their gold bullion bank.
  • The global liquidity torrent continues, which fits the Weimar description.
  • Price inflation continues to rush through the system's pipelines.
  • Flat gold mining output growth in 2007 is expected. Global gold demand in 2006 hit a record.
  • Geopolitical turmoil seems a constant, seemingly on the brink of eruption lately.

Critical factors which place the gold at risk are few:

  • A major coordinated central bank gold dumping might occur at any time.
  • The USFed might view higher long-term interest rates as USEconomic strength. Wrong! See lower OPEC surpluses. A rate hike would protect the USDollar.
  • Peace might emerge across the MidEast, as the US and Iran kiss & make up. Faggedabaddit! Russia is in the picture. Is that a Sunburn missile on that thar hill?
  • An economic recession across the United States and Europe might take hold, without any infection into the bank system. Not another Goldilocks theory?

I don't know about you, but 9 powerful PRO factors in progress, versus 4 CON factors (some unlikely) seem like great odds to me for a gold price increase toward new highs. The pros and cons line up to do battle over the gold price. Of course, for each gold price growth factor cited, the same applies to silver. These factors are discussed and fleshed out in the February report due this weekend.

Relevant events to the gold community are taking place with the International Monetary Fund and gold swaps, advice by Citigroup regarding Barrick Gold hedge books, and some large stated losses in gold derivatives by UBS. Suspicions remain prominent in my view of Exchange Trade Funds for gold and silver, with personal assessment given. The luster on vaulted gold contains some scum.


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Jim Willie CB is a statistical analyst in marketing research and retail forecasting. He holds a PhD in Statistics. His career has stretched over 24 years. He aspires to thrive in the financial editor world, unencumbered by the limitations of economic credentials. Visit his free website to find articles from topflight authors at For personal questions about subscriptions, contact him


Jim Willie CB, financial & economic analyst has experience in three fields of statistical practice during 23 industry years after earning a Statistics PhD at Carnegie Mellon University. The career began at Digital Equipment Corp in Metro Boston, where two positions involved quality control procedures used worldwide and marketing research for the computer industry. An engineering spec was authored, and my group worked through a transition with UNIX. The next post was at Staples HQ in Metro Boston, where work focused on forecasting and sales analysis for their retail business amidst tremendous growth. His website is at

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