Thursday, September 1, 2011

Jim Willie: "Huge Profits Are in the Process of Being Switched from Gold to Silver"

As mentioned yesterday in our post on silver's imminent breakout, Jim Willie discusses silver's bullish MA crossover in his latest. He also discusses the ugly stepsister known as the US Dollar, which currently looks vulnerable as the resolution of its 12 month wedge formation nears. If the dollar breaks its wedge formation to the downside, look out below, as new all-time lows below .71 are likely.

The biggest upcoming beneficiary to the USDollar and major currency debasement will be Silver. The Gold price made its summer run impressively, reaching 1900. Huge profits are in the process of being switched from gold to silver positions. The 44:1 ratio in price enables sizeable new silver positions to be leveraged. Look out for a significant upward price move in Silver, as its technicals are showing a very positive bullish signal. The simple Moving Aveage is set for a crossover, an event noticed by thousands of commodity and FOREX traders. Silver is unique, being both an industrial metal in shortage deficit, and a monetary metal pursued as a safe haven during a time of crumbling monetary system and rancid sovereign bonds. Always remember that Gold fights and wins the political battles, but Silver rides through the broken phalanx on a white horse to take triple the gains.

The USDollar appears vulnerable from two fronts. Since mid-2010, the US$ DX index has been under siege due to the heavy debt monetization of USTreasury and US Mortgage Bonds, during a hyper monetary inflation exercise of grand debasement. The threat from the other side is a US$ DX decline from a return slide into the quicksand of another USEconomic recession. A recession, whether recognized or not, will result in another round of stimulus initiatives of equally questionable effectiveness. More USDollars will be wasted, used, with certain debasement the outcome. Regardless of the next USFed move, or no move, the USDollar is extremely vulnerable. The only factor keeping it up is the ruin in Europe. Given the double barreled threat of an Inflationary Recession (my forecast), the USDollar is dangerously vulnerable.

Click here for more from Jim Willie's latest Hat Trick Letter: