At the Brink In Iraq..., by Rick Ackerman

October 10th, 2006 Price: Subscribe »

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ARCHIVED COMMENTARY

At the Brink
In Iraq...

For edition of January 31, 2005

The Dow Industrials would have finished the day unchanged, if not for the wallop that Merck took around mid-day. Shortly thereafter, I posted a Bloomberg article by Michael Lewis that marveled at the complacency that has seemingly kept financial markets from unraveling. Complacency was the theme of Friday’s commentary, but Lewis took it to another level: “On the face of it, the sheer calm in the U.S. financial markets is bizarre,” he wrote. “The sort of bad things more likely to happen now than just a few years ago -- bombs exploding in shopping malls, U.S. air travel suspended for weeks at a stretch, religion-inspired coups in nations rich in either oil or nukes, the American military bankrupting the American government -- would seem to be just the sort of things that might disrupt the American economy, and panic the American investor.”

It’s been quite a while since we saw even a hint of such panic. I can’t remember when, actually. But, Merck aside, investors were cool, calm and collected Friday while the news media were getting all lathered about the many things that could conceivably go wrong when Iraqis trek to the polls on Sunday. If there was any sign of trepidation in the markets, neither was it apparent in the bullion pits. Gold, historically a sensitive barometer of global tensions, was the deadest we’ve seen it in a week, trading inside the previous day’s placid range before settling 80 cents lower on the day.

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What Will Move Gold?

What disquieting turn of events could dislodge gold from its funk? I received a chart (shown above) recently from Mike Korell at Chartsedge.com that provides a basis for speculation. It shows bullion quotes in a state of mild agitation until the end of February, then blasting off for $500 and beyond. Putting aside the highly speculative nature of this forecast, which is based on neural-net projections, there are numerous real-world scenarios that we could concoct to go along with such a scenario. One that springs to mind is that, in the weeks following the election in Iraq, perceptions will grow that the tactical and political quagmire has deepened for the U.S. Our problems there would need to grow significantly worse to send the dollar into a dive, but that’s hardly implausible. Meanwhile, we can only pray that the images TV brings us on Sunday are of crowded polling places and relative calm. The days and weeks leading up to the election have done little to encourage us in such thoughts. But given the sacrifices U.S. troops have made so far, we dare not open the door even slightly to despair, not now.

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Phil Redux

I mentioned inveterate silver bull Phil Calderone here the other day, implying that his forecasts have been hit-or-miss but rarely subtle. Phil, a long-time correspondent, asked me to set the record straight, and I will – since, as the string of e-mail messages below attests, his enthusiasm for silver has not been misplaced, even with the metal currently trading 20% below its 2004 highs. “Some of my market calls have stunk,” he concedes, “and you may get to laugh at this new one if it doesn't pan out. But my Silver record is pretty darn good. Hope all is well.”

Here are his touts in sequence, with approximate dates indicated on the chart:

#1 April 24, 2003

Sorry you didn't step up to the plate on MMM, my hitting that one out of the park keeps me batting 1.000. Here is another pitch to take deep. I love Silver even more than Gold, given its relative value and the fact that it is behind the "manipulation" curve in that the gold manipulators have slowly been losing their hold while Silver is just about ready to see daylight from their handlers. Besides buying actual physical silver, $4.62 or so / oz. I would buy Apex Silver (SIL) right in here around 13. You can also buy the JUN, JUL, or longer term 12.5 & or 15 calls as well. This is a Major League recommendation for Wealth Preservation as well as a great trade.

#2 April 21, 2004

(Subject: Swinging for the Fences) Last April , almost a year to the day, I recommended buying Silver @ $4.60. It recently hit a high of $8.49. Now it has had a violent correction to the $6.45-$6.50 area. This is another GREAT BUYING opportunity like last year! DONT MISS OUT. Also CEF, which I have recommended since 2001 @ $3.20, recently hit a high of $6.49. It too has pulled back and should be bought aggressively @$5.50.

#3 June 15, 2004

(Subject: Second and possibly last chance for cheap Silver) Rick, a significant BOTTOM is in place for SILVER! While it may do little in the next few days or even weeks, once Silver rises above $6, it will be the last time that below-$6-Silver will be seen in our lifetime! Back up the truck, Right Here, Right Now!

#4 October 13, 2004

Rick, this is it! One day early (remember my credo "usually right almost always early"). My list of gold and silver stocks that I sent you months ago should be bought aggressively: CEF, PDG (did you see recently that Richard Russell echoed my thoughts about Newmont buying them?) CLG, GBN & MNG. Last time in our lifetimes that Silver can be bought below $7 & Gold near $400.

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