Now that the franc has withdrawn from the field only two safe havens remain – gold and silver.

September 07, 2011 – Now that the franc has withdrawn from the field only two safe havens remain – gold and silver. But remarkably investors are still shunning the precious metals like the plague.

Many have yet to be convinced of the need for shelter; they believe this crisis is not so different from those they have weathered in the past. A few hints from the Fed is all they need to rush right back into stocks. But it’s complacency that gets people killed when monster storms strike.

“Even nuts and bolts chart reading is serving up bad news,” says Michael Kahn of MarketWatch, pointing out that the trend line supporting stock’s bull market “has been soundly broken to the downside. So has solid support in existence most of 2011 on the Standard & Poor’s 500, the Nasdaq and the small capitalization Russell 200 index.” To him the signs are clear that “a cyclical bear market has begun.”

The Wall Street Journal’s Matt Phillips and Jonathan Cheng underscore the immediate danger, noting that following the “ugliest August in a decade … stocks are off to the worst start to September since 1974.” And for decades September is the only month that has consistently ended up in the red.

But what about those huge corporate profits? Well, they can’t keep making money if folks don’t spend it, and Friday’s report revealed the average wage shrank 0.1% last month. With no jobs added, that’s a giant step backwards.

Cracks are beginning to show in what had been a curiously strong levee holding back consumer frugality. Already third quarter predictions are showing a significant drop in the S&P 500 earnings and they are expected to continue falling next year as revenue growth declines.

Urs Gmuer, a leading Swiss asset manager, recently told CNBC that declining demand for debt capital assets has opened the gate for gold to enter a super-cycle, a bull market that “will end all the other major bull markets.” And silver is set to outshine gold.

The current gold/silver ratio of 45:1, Gmuer says, doesn’t come close to reflecting the decline in silver production over the past six decades, which today is only ten times that of gold. That is a very strong indication that a market correction is long overdue, and narrowing the gap by just one half would take the silver price up into the $100 range.

Now that currencies have been debunked as safe harbor, stocks are set to get flushed down the john, debt capital is falling out of favor, and gold and silver prices are chomping on the bit – isn’t it time to get over the phobia and head for the time-tested shelter of gold and silver investments?

Shannon King

Senior Staff Writer –

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