Steve's Place

[starboy]

I keep waiting, having had so many negative things to say about the economy, for my member marks to drift away. Sure couldn't blame anyone for it.

Who wants to hear bad news all the time? Actually, not me either!

I just want to warn people to be ready in case of a more serious meltdown, and, so many pointers are aiming in that direction, and the pace is accelerating.

Continued foreclosures
Bank failures continue
Automakers, even if bailed out, up against the wall because of lowering sales, causing more job losses in that industry and more dealerships, (whose cities counted on their tax revenue), closing
Homelessness, (where do the foreclosed people go, and the people who lose jobs and run out of money to rent or lease go?)
Job Losses
Malls, hotels, begin to close (more tax revenue lost to cities)
Credit card companies will cut back on available credit, raise fees. Some will almost immediately fall into poverty without access to money from somewhere.
Cities & towns will try to raise property taxes. People will revolt against this tactic
In the most direly affected areas, civil unrest will occur.


To continue our own discussion, I think oil going lower, and the dollar firming, will drag gold and silver down until the day there is a panic and people simply have to have a hard asset that isn't based on a suspect fiat currency. And especially if the USA government sovereign debt rating is lowered at some point.

Bet the Dow is at 6500 by end of this month and commodities continue to fall with it as even the strongest hedge funds sell off precious metals. Gold may end up in the 600's before people's and countries have fears that they don't have enough to ride out the massive deleveraging, and which will bring in more buyers, or, the Chinese begin stealth buying to shore up their PM holdings against dollar surpluses.

The coming hedge fund meltdown
http://articles.moneycentral.msn.com/Investing/Extra/the-coming-hedge-fund-meltdown.aspx

And we also have the Dubai effect as a potential upsetter.

Can a Dubai Silver ETF Send Global Spot Prices Higher?
by: Peter Cooper November 18, 2008 | about stocks: SLV

The Dubai Multi Commodities Center is understood to be putting the finishing touches to an exchange traded fund for silver with a launch likely next month as demand for silver has surged in the past six months.

Local bullion dealers are having to fly heavy silver bullion bars in from around the globe to meet demand as traditional sources closer to Dubai have been exhausted. The DMCC has successfully established itself as a regional hub for commodities trading over the past few years, and has its own swanky new business park with its gold, silver and diamond towers.

City of Gold
Around 20 per cent of the world’s physical gold trade is conducted through Dubai which used to be the epicenter of gold smuggling to India thirty years ago when import taxes were sky high. Nowadays Dubai is a convenient logistics center for commodities traders and still tax free.

The details of the silver ETF are being kept under wraps for the launch but plans seem advanced. Local jewelers have long used silver in a 25:75 amalgam with gold to create white-gold which is popular with consumers.

But clearly the ETF is an strictly an investment product, and demand for the shiniest of metals has been rising strongly, as evidenced by the high premiums now being paid on coins and bullion locally.

ETF price advantage
The latter also gives the ETF a natural advantage. Its price will be closely linked to the lower spot price for physical silver, and not be inflated by the high premiums now paid on physical silver.

Investors will no doubt appreciate this keen pricing advantage, and hope to also profit from the leverage silver offers to the gold price. In previous gold price booms silver has outperformed the yellow metal, and the gold-to-silver price ratio has fallen sharply.

Will the new Dubai silver ETF have a big enough impact on the tiny global silver market to send prices higher like the Hunt Brothers did in the late 1970s when they cornered the market? Well, nothing succeeds like success and a silver ETF in Dubai looks like being the right product in the right place at the right time.