You gotta love Jim Rogers. This guy is consistently right on the money.

Interestingly, Gold has held its ground, during this incredible sell-off

The gold and silver shortage has not abated, and if you can find gold or silver at the retail level, consider yourself fortunate.

While all other classes are getting slaughtered, gold still has second best performance of all assets in the following chart:

A great letter from one of our fellow bullion dealer colleagues:

Dear Clients and Friends,This is the day you bought gold for. You are probably as shocked as we are to watch the on-going devastation created by the banking crisis, the Stock Market meltdown, and the U.S. Government Trillion Dollar taxpayer funded bailout plans.

* Oil prices are down more than 50% from the highs.
* The DOW’s lost 40% from Oct ‘07 highs.
* A broader index, the S&P 500 is off 40% in the past year
* The NASDAQ is down 41%.
* Fed Funds interest rates are down from 4.8% a year ago to 0.7% today
* Gold is down only 1% from the price of one year ago.

This is what happens in a Financial Meltdown! Investments you depended on for years suddenly crash and years of profits are lost in a matter of days. It’s ugly. Alan Greenspan, the Ex-Federal Reserve Chairman testified today, “We are in the midst of a once-in-a-century credit Tsunami.” We wish he had said instead, “We were wrong, America cannot borrow our way out of debt or into prosperity.” Sadly, he doesn’t get it.

The Perfect Financial Storm

Is it any wonder that investors have lost confidence in our financial system? As a result, stocks, bonds, homes, real estate, commodities, and even precious metals are caught up in an event we predicted was coming over two years ago. We called it the “Perfect Financial Storm.” When the Austin Report researchers faced the most optimistic Stock Market in history hitting new highs, we dared to warn our readers that falling home sales, a mortgage crisis, and inflation threaten to suddenly drive down stock prices and would ultimately take the world’s economy into a severe recession.

Now, after the disaster has struck, the mainstream media describes this as the worst banking crisis since the 1929 Stock Market Crash and the Great Depression. Little do they understand of exactly how correct they are or how much further stocks still have to fall. The wild gyrations reflect that investors have totally lost confidence in the world stock markets. Years of blindly trusting their life savings to Stock Brokers has ended poorly. Millions of Americans are finding their 401Ks, IRAs, and stock portfolios losing half or more of their life savings.

Most Severe Gold & Silver Coin Shortage Ever

As one of American’s leading internet Gold and Silver dealers we are in a unique position to observe the markets and comment on them. From an investor point of view, this crisis is far from over. Bank runs are continuing and money markets are being liquidated as people are moving to safe havens.

1. We must report that there are no Gold or Silver Coins in dealer vaults or at the mints. Demand has simply overwhelmed the physical supply-every dealer has sold everything!

2. To complicate the shortage, the U.S. Mint halted minting 2008 American Eagles for the year. The Canadian Mint, Austrian Mint, and other World Mints are waiting for 1,000 ounce Gold and Silver Bars so they can mint coins and fulfill backorders. Even bars are in extremely short supply.

3. As we write this letter, the wholesale premiums for Gold and Silver Bullion coins have risen to the highest levels we’ve ever seen. Despite strong bids, none of our clients are calling us to sell physical coins or bars during the financial panic. They realize their reasons for owning physical gold and silver are coming to fruition.

4. By contrast, Gold and Silver futures prices are way down this week. This is a paradox that clearly indicates the financial crisis has spilled over into the futures markets for precious metals. What we like to call the “paper” Gold and Silver market is just that- bets on the movement up or down. Right now, the price to really buy a physical Gold or Silver coin is far higher than the futures price.

5. Falling prices would make one think that Gold and Silver are trading like commodities- oil, copper, and wheat that go down during a recession. That’s should not be the case. In a crisis, in times of recession, and inflation, precious metals become the “money of last resort.” We feel that the huge demand for physical Gold Coins and Silver Dollars is evidence that investors are protecting themselves from monetary risk.

In Our Opinion….

Gold and Silver, at today’s price lower levels, may be the “Buy of the Century.” The last time Gold dipped near these levels we sent a Red Alert declaring prices were about to rise $50 in one day. Frankly, it was the most optimist prediction we had ever made. the next day Gold rose $80. It was our best call in history! Right now, we’re feeling that we may be very close to another turning point.

Normally, we don’t like to see wild gyrations in precious metals prices. Gold and Silver are not a get rich quick scheme. We think of them as “safe money”, an alternative to risky stocks and paper U.S. Dollars. We expect that while everything is crashing around us, Gold and Silver to be resilient in the long-term and come to our rescue as- “the world’s currency of last resort.”

The Hedge Fund Problem

Right now, the impact of Hedge Fund selling of all assets is creating chaos. Massive Hedge Funds with Billions of Dollars enticed big investors with promises they’d make money in good or bad stock markets. They often made huge “BETS” that were highly leveraged. They shorted stocks they believed would fall or pushed stocks upward on momentum creating shockwaves of volatility.

Hedge Funds often held large positions in Gold and Silver futures or Exchange Traded Funds as well. This was a key to making money (hedging) when stock prices were falling. This year, many Hedge Fund profits have been wiped out in the financial crisis. They made too many bad bets. Investors are demanding their money back. Hedge Funds have been forced to sell everything to raise cash. In a falling stock market, Hedge Funds are forced to liquidate bad stocks, good stocks, great stocks, and liquidate their Gold and Silver positions.

These huge waves of “paper” selling are unexpectedly driving down the value of all asset classes including Gold and Silver. No one in our industry expected this to happen. But, this is where we are. We only wish the Hedge Funds were selling piles of physical Gold and Silver that we could buy from them, but that is not the case. They are only liquidating future contracts, options, and electronic assets. The sheer volume of money moving out of “paper” gold and silver investments has temporarily become the dominant price factor, overpowering the powerful demand in the physical market.

This is Phase One

Whether professional institutional investors are liquidating to generate much needed cash, cover losses in other assets, or to pay debts as they go out of business, the massive run out of electronic assets is underway. This is exacerbated by individual investors acting accordingly out of fear or need of funds. Assets that are liquidated are replaced with dollars and this process can take time. Investors aren’t moving into dollars because they believe it offers attractive long-term strength.

They’re moving into dollars because they have no choice. You sell, you get dollars. For the short-term, the dollar is relatively safe compared to the chaos of stocks, hence the strong dollar. Long-term, savvy investors know the dollar will succumb to the slow death of inflation as the U.S. Government launches the largest creation of new dollars ever for the massive bailouts.

Phase Two

Investors ask, “Now what do I do with this cash?” As investors take this into consideration and re-evaluate in the weeks and months ahead, they’ll be searching for an asset class known as:

* A physical, tangible investment
* A hedge against inflation and economic turmoil
* A profit maker when the economic cycle turns against mainstream assets
* Real money for generations

Only physical Gold and Silver qualify. Only a small fraction of people own physical Gold and Silver today. For these reasons, we see only increasing demand in the years ahead for precious metals. We feel those with the foresight to read the writing on the wall and protect at least a portion of their wealth in Gold and Silver during today’s artificially low prices will find security, peace of mind, and profit in the years ahead. Will you be one of them?

Phone Ringing Off The Wall

Despite falling prices, our phones continue to ring off the wall. Investors are wiring $50,000 to $250,000 at a time. Clearly, the flight-to-safety continues out of banks into Gold and Silver Coins. These new clients are waiting four to six weeks for delivery if they can lock-in lower prices today.

Our point is this- It’s not too late to get a great bargain in Gold and Silver. We have no reason to change our opinion that precious metals will be the safest, and in the long run, the most profitable place to park a portion of your cash. If you don’t yet own any physical Gold or Silver, we feel this is a perfect time to enter the market at undervalued prices.

Another letter from Anglo Far-East Bullion Company Managing Director, Philip Judge:

ANGLO FAR-EAST ANNOUNCES NO SUPPLY DISRUPTION DESPITE RECORD DEMAND IN GLOBAL PRECIOUS METALS

Precious metals refinery capacity maxed out globally in recent weeks due to record levels of investor demand in the metals.

Recent currency volatility and financial institution fragility has been cited as the driving reasons for the record numbers of investors flocking to silver and gold in recent weeks looking for the stability and safe haven the metals have traditionally offered. Global bullion refining capacity has been quickly overwhelmed by the sudden spike in demand for physical bullion supply.

“People are often surprised to learn there are less than seventy industry accredited refiners in the entire world” said AFE’s bullion treasury manager Simon Heapes this week, “refineries have been running three fully staffed shifts most of the year. The industry is just not geared for such huge spikes in demand as we have seen in recent weeks”.

Many refineries are announcing long delivery delays and many are taking no further orders till Q1 quarter of 2009, particularly for refining of smaller investor type bars and coins, while North America coin dealers have been out of all stock for many weeks.

AFE announced this last week after weeks of record demand it continues uninterrupted supply to its clients with allocated good delivery bars through its network of long term supply relationships and unique global infrastructure. “In peak times like these, long term multi-decade relationships are critical” commented AFE’s Founding Director, Philip Judge.

Join Our Newsletter

Short Video Series: Understand why the financial crisis is occurring, and how to protect yourself

Buy Gold and Silver Bullion

Chart of the Day - DOW

For some long-term perspective, today’s chart illustrates the Dow adjusted for inflation since 1925. There are several points of interest. For one, when adjusted for inflation, the bear market that concluded in the early 1980s was almost as severe as the one that concluded in the early 1930s. Also, the inflation-adjusted Dow is now less than double where it was in 1929 and trades a mere 29% above its 1966 peak. Not that spectacular of a performance considering the time frames involved. However, the magnitude of the bull market of 1982 to 1999 (even when adjusted for inflation) was truly of historic proportions. It is also interesting to note that the magnitude of the current bear market (when adjusted for inflation) is greater than what occurred during the dot-com bust of 1999 to 2003. As a result, the Dow currently trades at 12-year lows.

Join Our Newsletter

Short Video Series: Understand why the financial crisis is occurring, and how to protect yourself

Buy Gold and Silver Bullion

Just loaded up two new pages:

Two Gold and Silver Prices, Total Disconnect Between Spot and Real Price

Excerpt:

The happiest fact of bullion bankers’ lives is that western markets are, with the exception of some fabrication and industrial demand, almost 90% paper based.  The huge COMEX futures market almost never sees an ounce of real silver or gold ever change hands.  It is all paper, shuffled back and forth.

***

Robert Kahre vs. the IRS and DOJ

On a 106-degree May afternoon in 2003, government agents raided several establishments belonging to Southern Nevada businessman Robert “Bobby” Kahre. With guns drawn, officials held more than 20 handcuffed workers in the sun without water as agents collected records and other materials.

Kahre hadn’t committed a crime. He had upset the Internal Revenue Service by paying his workers based on the face value of gold and silver coins, versus the market value in the Federal Reserve system (the value of the coins in U.S. paper dollars). Even though the coins were in circulation, displayed a face value, and were regulated by Congress, the IRS’s confusing and endless tax code did not determine how to handle these gold and silver coins if used for payroll. The tax code only references dollars. It does not distinguish between coined money and paper money.

Join Our Newsletter

Short Video Series: Understand why the financial crisis is occurring, and how to protect yourself

Buy Gold and Silver Bullion

From our friend Chris Powell:

10:54a ET Saturday, October 18, 2008

Dear Friend of GATA and Gold:

Your secretary-treasurer was given a fair amount of time Thursday night to explain the gold price suppression scheme to the annual fall dinner meeting of the Committee for Monetary Research and Education (www.CMRE.org) at the Union League Coub in New York City.

It was a good crowd, about a hundred people, mostly from the financial industry, and it enjoyed the unscheduled attendance of Robert Mundell, the Nobel Prize-winning economist from Columbia University who is regarded as inventor of the euro (http://www.robertmundell.net).

The CMRE always has been a gold-friendly group and the questions from the people in the audience suggested that they were more interested in gold’s prospects right now than in anything else.

Mundell had a couple of notable things to say about gold. First, that China, with its huge dollar surplus, has a great interest in buying gold to hedge its dollar exposure but is unlikely to do anything disruptive to the world economic order. Second, that if the International Monetary Fund really does sell its gold, as is occasionally proposed (and you may recall that I doubt that the IMF has any gold at all, just a tenuous claim on the gold reserves of the United States; see http://www.gata.org/node/6242), China should purchase all of it. Since Mundell is officially an adviser to the Chinese government, presumably it already has heard this suggestion from him. If the IMF really does have any gold and China is prepared to buy it all, of course this would prevent that gold from depressing what passes for the gold “market.”

A man in the audience who identified himself as a Comex gold trader asked how he could protect himself against U.S. government intervention to obstruct delivery of gold due on the December contract. I replied that unfortunately the only defense against such lawlessness by the government might be the Second Amendment.

Walker Todd, a mainstay of the CMRE, a moderator of the dinner’s speaking program, a research fellow for the American Institute of Economic Research (www.aier.org), and former assistant general counsel and research officer for the Federal Reserve Bank of Cleveland, remarked at length to the meeting about the plausibility of the gold price suppression scheme, which was much appreciated.

Several longtime GATA supporters from around the New York area and the country attended the meeting, and it was great to see them.

I’m especially thankful to CMRE’s president, Elizabeth Currier, for this chance to bring GATA’s case to some thoughtful and influential people.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.