James Dines: “Remember,
gold moves on its own cycle. It has come down with the whole raw
materials crash in China, and it’s dragged down every single raw
material including rare earths, uranium, everything. But gold is
different. Curiously enough we have been getting an upturn in some of
these rare earths and uraniums. They seem to be moving together for
some reason. The answer to that is probably somewhere deep in mass
psychology.
“And that’s happening
in the Middle-East. That’s expressing itself in Egypt right now. The
violence is going to get much worse. And of course whenever there is
trouble around the Suez Canal, the prices of oil and shoots up. Why?
Because the people in those areas are uncertain about their currencies
-- will they be there tomorrow?
So they
swing their money into gold, and to some extent silver. That’s what’s
happening now. Gold will move generally, but not precisely, against or
opposite the stock market -- not every day but generally.
The
Dines ‘Wolf Pack’ theory says that groups of similar economic
backgrounds tend to move together. You will note that all of the metals
tend to move together -- gold, silver, platinum, and palladium. We
flashed a buy signal on gold again recently, and we think they (the
metals) look higher.
It
depends on whether there will be peace in the Middle-East or what’s
going to happen. The area is in turmoil. It’s historic. The area is
seething, and worse than that there is an eery collection of
coincidences relating back to the 1930s. (As an example) the popularity
of Superman is an interesting resurgence.
You are
also getting a re-militarization of the Far-East. Japan, India, and
the Philippines have just announced aircraft carriers to counter the
aggressiveness of China. China is still screaming for revenge for
Nanking. That area looks like a war (is coming).
So it
looks like the 1930s, the rebuilding of navies -- all of this is so
typical of what led up to World War II. That of course would be very
bullish for gold. In addition to that, you also had the Fed running the
printing presses like crazy during the 1930s. That’s when this
generation of economists got locked into the idea that running the
printing presses and printing crazy amounts of money and going ever
deeper into debt really got started.
Not
many people realize that Franklin Delano Roosevelt raised the price of
gold in the 1930s, and I think that was one of the key reasons there was
a recovery. But even in the 1930s, the unemployment problem was not
solved until after World War II started and a lot of the population
moved into the military.
Fed-head
Bernanke is out of control. Bernanke is still overspending and
over-borrowing to boost the economy -- frantic, fanatical, undeterred by
six straight years of spending and increasing debt. (He has) utterly
failed to increase the number of paying jobs, and still insists that
even more will help.”
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