Alert: PAAS

With silver trading back down into the single digits it's a great opportunity to load up on some more physical silver, but he cannot get any. The physical silver market dried up completely last month even as prices crashed and there is still a delay in shipping in most cases. This is not the only Alice in Wonderland weirdness going on in the world of silver.

It's almost like something out of the Twilight Zone.

The American economy is breaking down. But the US dollar is one of the strongest currencies in the world right now.

U.S. investment vehicles are crashing. Retirement funds have lost trillions. America has significant unemployment and the Federal Reserve continues to inflate the US dollar. Yet the greenback has outperformed almost every major world currency since the middle of summer.

How can this be?

Glad you asked

The U.S. dollar's reserve currency status does many positive things for America. It allows the country to purchase the commodities at a marginally cheaper rate than other nations, which must exchange their currency with each purchase and pay a transaction cost. It also permits the government to borrow money at a better rate, as there will always be a larger market for that currency than others.

But there's a catch.

There is another catch actually, $3 trillion created for the banker bailout. This US Treasury and the FED need a strong dollar to absorb the mortgages rotting on bank balance sheets worldwide. Once that decrepit fruit is offloaded on to the back of the American taxpayer money created from thin air will collapse under its own weight and crush anyone below.

Now go to the chart of silver or gold, take a long look at the tick, then ignore it because it is meaningless.

Gold prices have not been performing as one would expect them to do in the current climate of financial crisis, failing to break above $920 and now dropping down to $800. This is because gold prices and the US dollar are inversely related, and we have seen a rally in the greenback recently. However, this is a false rally in our opinion, as it does not represent investors going to the USD, but moreover they are simply fleeing away from everything else. American stocks are being sold heavily which creates a demand for US dollars, and other central banks are cutting rates severely. The feeling is that at 1.5%, the Fed doesn’t have the room to cut rates much more, but other central banks do since their rates are higher, therefore the US dollar is viewed as preferable relative to other currencies.

The precious metal's and miners is where we want to be. My favorite two choices are the GDX and Pan American Silver Co. (PAAS).

Open a 1/4 position in PAAS,

Buy 25 shares PAAS at $12.03

Stop Loss at $$9.78