So a few hours before the open this Monday morning, I am looking at Nasdaq futures currently trading nearly 50 points down after the announcement of the bankruptcy of Lehman and sale of Merrill. The system disassembles itself…
No doubt this will take the gold and silver shares down today, as the USD is way up again (currently .90 retracing nearly all it’s loss on Friday) and oil fell off a cliff – what a yo-yo game! Anyways, this is the environment that will eventually reveal whether or not silver will be viewed as a currency or if it will divorce itself from gold leaving gold alone as the ‘currency of last resort’. During the Depression of the 30′s, silver dropped to .25 cents an ounce at it’s low, or using on online inflation calculator $3.76 today. If we consider that the calculator is based on the government CPI over the last 70 years and argue that the true inflation rate is perhaps twice that, then that gives us a price of $7.52 in today’s figures, not terribly far from where silver is priced today. Also disconcerting is the price action today where gold is up $5.50 currently and silver is down nearly 40 cents, a minor variance from silver’s normal shadowing the price of gold, particularly on this morning, but notable.
I am trying to decide whether to buy some puts for protection this morning, or whether to sell a small portion of my holdings for that all too valuable cash, or do nothing at all – probably the latter. Values are really confused… oil is way down, the dollar is way up, the stock market will open near it’s bottom values and may rise on short covering, and the Fed must be under pressure to actually lower the interest rate tomorrow. Who knows… oh by the way, good meltdown morning…
