In my September 22, 2010 column, I reported on the September 21 announcement by the Federal Open Market Committee (FOMC) that the FOMC considered the rise in US consumer prices to be too low. I suggested that this announcement might be the “September Surprise” that other market observers and myself were anticipating.
For several months there were constant rumors that the financial markets would be clobbered by some unexpected development in September, with the expected result that gold and silver would soar while the value of paper assets like the US dollar plummeted.
At the conclusion of the FOMC meeting on November 3, the Fed announced the specific action it would be taking to inflate the US money supply by $600 billion by the end of June 2011. Actually this statement understated the action as it did not include another $250-300 billion increase in the US money supply from mortgage collections by Fannie Mae and Freddie Mac that would also be used to purchase US Treasury debt.
The September 21 announcement by the Fed did not lead to the immediate soaring of precious metals prices. I did not expect the market to react that quickly. In the seven weeks since that pronouncement, however, there have been three significant developments.
On October 26, Bart Chilton, a commissioner of the Commodity Futures Trading Commission issued a statement alleging that the COMEX silver market had been fraudulently manipulated. He called for prosecution of any violations of the Commodity Exchange Act.
On October 27, JPMorgan Chase and HSBC, the two banks suspected of having the largest short positions in the COMEX silver marker, were hit with the first of what are now several lawsuits alleging illegal manipulation of the silver market.
Finally, on November 3, the Fed revealed the details of its plans to inflate the US money supply, trying to mask the move by referring to it as quantitative easing.
So what has happened to gold and silver prices in the last seven weeks? Gold has gained more than 11%. Silver is up about 40%!
Since the beginning of 2010 gold has risen about 30% and silver has soared by 70%! Despite these increases, there are ample reasons to conclude that we are still close to the early stages of the next major boom in precious metals prices.
You are welcome to review my columns posted at CoinUpdate.com and Numismaster.com and also my monthly newsletters at libertycoinservice.com for more details on the reasons why gold and silver prices still are nowhere near their peak. For those who live near enough to Lansing, Michigan, you may also want to come to my public address on “Current Gold and Silver Profit Opportunities” that I will deliver at Premier Coins & Collectibles on Saturday, November 13 at 2:00 PM. Premier is located in the western Lansing suburb of Delta Township at 7050 West Saginaw Highway.
As I write this, almost all physical gold and silver bullion-priced coins and bars are still available (and at reasonable premiums). But, the longer you wait to protect yourself, I fear that you will have to pay a higher price and have fewer choices. If you have not yet taken action, don’t delay any longer.
Patrick A. Heller owns Liberty Coin Service in Lansing, Michigan and writes “Liberty’s Outlook,” a monthly newsletter covering rare coins and precious metals. Past issues can be found online at http://www.libertycoinservice.com/ Pat Heller is also the gold market commentator for Numismatic News. Past columns online at http://numismaster.com/ under “News & Articles”. His radio show “Things You ‘Know’ That Just Aren’t So, And Important News You Need To Know” can be heard at 8:45 AM Wednesday mornings on 1320-AM WILS in Lansing (which streams live and becomes part of the audio and text archives posted at http://www.1320wils.com.