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0920 EDT Wednesday April 05 2006

Good Morning: As far back as Copper was not much more than one Dollar per pound came word that some Chinese trader or hedger was heavily short Copper having sold forward a bunch of the red metal eons ago. Not so long back, Rob McEwan revealed on national TV that he thought some Gold companies could still be short Gold, having sold forward as far back as when Gold was $300 per ounce and have so far been unable to deliver the Gold, to fulfill their contractual obligations. Many months ago in our special report: "The World is running out Gold", we quoted the possibility of a 10,000 ton total short position in Gold and since a good while back now, it was estimated that there was less than 50,000 tons of Gold left in the World to be mined, that short position would effectively cut that number by one fifth to 40,000.

Investors don't seem to have yet come to grips with what a World running out of Gold and Silver and maybe even Copper and Zinc really means, but we have gotten a foretaste in recent days and it was stated somewhere by someone when this short Copper story first broke: "There was not enough Copper in all the World, let alone China to deliver on those contracts". While such scenarios take a long time to unfold and develop, then tend to accelerate into a crescendo effect over time and then truly dramatic movements can be truncated into a relatively short period of time such as what occurred in the late 1970's in Gold and Silver and what is beginning to happen today in the case of Base and Precious Metals and is something we have been predicting now for a very long time, since we first published our theory that the World was running out of Gold several years ago.

Readers may recall how we have been predicting the inevitability of a Limit Up move in Silver and Gold sooner or later and last week, we predicted ahead of time to the day, the first Limit move in Silver in a decade or two that actually went beyond the Limit and overshot by so much overnight that it reversed from just under $12 at $11.94 before correcting back some. Readers should understand that a Limit move is really a buy signal, because it reflects and increasing sense of desperation by the shorts, that they cannot take it any more and want to get out at any price. And, since there hasn't been a limit move since some of the traders on the Comex were in diapers, what kind of a message is a Limit move sending to the marketplace? It's telling the market that the dynamics of the Gold and Silver are changing quite dramatically and something very big is going on under the surface. It's kind of like the Dow Jones lifting off from its lows in a record price advance back on August 16 ~ 17, 1982 and again on January 16, 1991. Those two very strong advances heralded the back to back bull markets that became the greatest bull market in history and the sleeping giants of Gold and Silver are only just awakening from a multi-decade slumber and the measured moves off these elongated bases are almost too high to mention here because they border on ridicule, but are not unlike forecasting a Dow Jones of 10,000 at 777.20 on August 11, 1982 or even foreseeing a 50 fold increase in the Dow from 1955, that actually took only 45 years to happen. That makes our target price of Gold at $3,700 by 2019 look tame, being only 13 years away, but makes some other predictions of as high as $38,000 per ounce Gold, a lot less outlandish. Gold and Silver have a lot of major catching up to do and like the song said, we've only just begun to witness what may become one of the most incredible bull markets ever.

Trade Well
From the Desk of Savant

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