Fed Rate Drop Prediction

One of the financial luminaries I follow closely, and highly respect, has sent out an alert saying, 

“If the equity markets cannot be calmed before opening tomorrow, Tuesday, January 22nd, you will witness the greatest financial crisis of all time. So far the Chairman of the Fed and the President bombed out as badly as one could.* This necessitates Herculean measures in order to prevent the Dow from opening down 1000 points tomorrow morning. If that was to occur, I assure you the Four Horsemen will have ridden down Wall Street.” Jim Sinclair. 

He says either the Fed will announce an emergency 1.000% cut in the rate before the markets open at 8:30am CST or the market will suffer its biggest single-day point loss in history, surpassing the 650 pt drop after 9/11. 

The dollar (US Dollar Index) is UP as money managers are diving out of the markets and parking the money in cash (dollars). This is driving DOWN gold and silver. This is temporary. Gold is going to $1050, then $1650 and taking silver with it. 

If you want to invest in something that goes up when the NYSE goes down there are some “inverse indexes” that do just that:Symbol = DOG  “SHORT DOW30 PROSHARES” Symbol = SH   “SHORT S&P 500 PROSHARES”  

There are also two inverse indexes that are leveraged to provide DOUBLE the rise if the market falls:Symbol = DXD  “ULTRASHORT DOW30 PROSHARES” Symbol = SDS  “ULTRASHORT S&P 500 PROSHARES” 

I’m not jumping in yet as I think the Fed will cut rates rather than let the market drop (at least for a few days). 

*Bernanke announces he’ll supply all the liquidity needed for the markets. DOW drops 300 pts. Bush sez “tax refunds for everyone!”. DOW drops 60 pts. 

◊◊◊◊ As of today: Gold @ $871.25, Silver @ $15.77 ◊◊◊◊

Ag Au Goin’ Nuts

I’m sure you’ve all noticed silver and gold going nuts. I believe 2008 will be the year the financial markets all fall apart so please protect yourself and your families.

Remember the list of the top 25 banks exposed to derivatives (the green paper) I had posted on my overhead bin? It’s unraveling quickly.

  • CountryWide Financial almost went bankrupt (bought out today by Bank of America to conceal the derivatives they had exchanged),
  • Merrill Lynch and CitiBank  (who just fired their old CEOs) are running to the Saudis looking for a bail-out.
  • Capital One stock at 52-week low.
  • United Nations warned of “clear and present danger” to world economy.
  • Foreign Central Banks are no longer net buyers of US debt but now net sellers.
  • City of Baltimore is suing Wells Fargo over subprime mortgage lending practices
  • Merrill Lynch now forecasts US recession this year.
  • Today Moodys threatened to drop the US Gov’t credit rating down from AAA (it’s been at AAA since 1917). 

Predictions: Gold is heading to $1050/oz short term, followed by large swings, before hitting $1650/oz next year. Silver is heading to $21/oz short term before hitting $55/oz next year.  

◊◊◊◊ As of today: Gold @ $891.00, Silver @ $16.06 ◊◊◊◊