For the past few years I have been a “watchman on the wall” for the readers of our blogs. The readers were told to expect gold and silver to move notably higher, warned of a Great Recession, and warned of the financial system’s stress due to toxic mortgages. As we know those events are now in play. With the latest reporting of the legal battles erupting all over the country, expect gold and silver prices to become volatile with possible $100 swings in gold within a 24 hour period. Yesterday, I saw “Wall Street, Money Never Sleeps”. This movie provides a stark view of the way Wall Street thinks, acts, and responds. Oliver Stone captured Wall Street’s essence and arrogance when Michael Douglas proclaimed “I used to say ‘greed is good’, but now I must add ‘greed is legal too’”.
Anyone who has ever reviewed an abstract or county courthouse records understands the requirement for “chain of title”. Property rights in America are based on a well-recorded history of the chain of title. We buy title insurance to insure that we have clear title to our property so that nobody can come back and legally take our property away due to some failure of proper recording of a deed. This includes error and omissions of legal descriptions, names, etc. This is where the ugliness begins. For an in depth understanding, the following video is a must: http://market-ticker.org/akcs-www?post=168528
Bankers have received a “cease and desist” order to stop foreclosures in several states because of this problem. What about those of us who have paid our mortgages? Has the recipient of our interest been collecting it illegally, without a note to back it up? That is another issue in itself. If I were to demand the lender to prove his legal position to collect interest in a court, could he? This sloppy handling of paperwork could work its way up the food chain rapidly if bloodthirsty attorneys began building a class action suit against the perpetrators of the greatest fraud in American history. Could this be the tipping point I’ve been writing about in the last several months?
As confidence diminishes in the U.S. economic structure, the dollar will get hammered. Hot money moves around the globe at the speed of light. This sets the stage for extreme volatility in the gold market. I would expect to wake up some morning and find that gold has jumped $100+ overnight in other markets whereas silver might jump $2 in a single trading session. At some point, investors will see that they can leverage their investments by investing in gold and silver mining stocks. Currently, the stocks have been lagging the metal marketwise. Once John Public figures this out, I expect the stocks to outperform the metal. Professionals see this as phase three of the bull market in precious metals where big money is made as prices skyrocket.
When do you sell? I suspect we have a long way to go before the resolution to all of this monetary meltdown is resolved. Until then, volatility will be the name of the game.