Everybody who called today -- and a lot of people called today -- asked the same question, "What happened to gold & silver?" Oddly enough, I don't know, other than to say that's what technical analysis is all about, drawing out support and trend lines so that you know that if a market dips or rises beyond a certain point, it will fall or rise suddenly much further. I don't pay much mind to all the rumors & speculations. For me, the chart hides all that information inside itself. But to make y'all happy, I went & looked, & felt like one of those goofy TV people who always wants a neat cause & effect to dish up to his naïve audience so they can go to bed thinking they know what's going on. Fact is, they don't know, and I don't know. Markets is people, therefore mysterious because humans are mysterious. Women are even more mysterious, if you're a man. In December I will have been married 44 years, & I still love my wife so much it's embarrassing, but she remains a mystery to me. Don't ever try to explain mystery. Anyhow, I went and looked for news stories that might suggest some catalyst (not cause! Inflation & the bank solvency crisis are the ultimate cause!) for this drop. I looked at the US dollar index, but it was only up 27.9 basis points, which didn't seem to show any panicked flight into the dollar. Looked also at the US Treasury not 30 year yield which would have jumped up (bond would have risen) if bunches of people were buying bonds as a way to buy dollars. Nope, it sank a little today. And the euro didn't drop, but was flat. Since stocks, gold, and silver all fell, I reckon that the panic started in stocks, which were hovering above support at 11,950 already, and once they broke panic infected other markets as well. Break in stocks came about noon, and in gold & silver, when they violated support levels. In detail, it looked like this: The Dow had support at 11,900 or so, dropped through that ans lost 134.86 points (1.13%) to close at 11,770.73. S&P500 lost 11.11 (1.52%) and closed at 1,216.13. Let me explain: around that 11,900 lay the uptrend line, which was the bottom of an even- sided triangle. Those equivocal triangles can resolve with a breakout up or down. This one broke out down. Back away from the chart a little. Look up above where the 200 dma stands at 11,975. Above, I said. Dow, locked in a BEAR (down) primary market, traded UP to the 200 day, barely pierced it, then fell back below it. If this were a Tarzan movie, you would not only hear the drums in the background, you would not only see the safari bearers throwing away their burdens & running off into the jungle, you would not only hear the lead bearer tell the Englishman, "Bad juju, bwana!" but you would also see the bearers disappearing feet first into the jungle as snares caught their feet and you would see poisoned arrows whizzing around the Englishman's head. The stock safari is in big trouble, Tarzan has left the escarpment, & the Wazuzus are closing in, ready for supper. US dollar index continues to rise. Last two days on the five day chart bears strongly the suspicious fingerprints of the Nice Government Men, stopping the market cold at 78.4. They won't be able to hold it there, and once it breaks thru twill run like a scalded dog. Already today it broke out upside from an even-sided triangle abuilding since 1 October. If we measure that triangle and guess that the dollar will move about the height of the triangle from the point where it breaks out, target works out to 83.12, a price not seen since August 2010. Euro and the yen were flat today. Yen is trying to rise, euro is trying to sink beneath the waves to Davy Jones' locker. Gold dropped through $1,755 at 7:00 A.M. New York time, and fell clean to $1,740, where it held on manfully until the NY market opened. It dipped, climbed over $1,740, but once it went below again, never recovered. About 12:00 it sank quickly to $1,711.92. Gold dropped $54 today, 3%, to close $1,719.80. Gold has now smashed support at $1,750, and sunk nearly to $1,705 support. Lest you lash me, I warned y'all on Monday that if gold broke $1,775 it could drop $75 - $100. I've been waiting and waiting for this, ever since September -- this final leg of gold's down move. I have not a clue whether it will stop at $1,675, $1,535-1,550, or drop to $1,460. Between here & there stands an uptrend at about $1,675 today, & there's a good chance it might catch there. And it's mere wild speculation on my part, but if I were in charge of the NGM facing a 9-month pregnant financial crisis in Europe, I'd be slapping both the dollar and gold for all I was worth. Bottom line of this meditation is: buy gold. Don't fool around and get greedy, trying to squeeze out a few dollars. Buy some at $1,705, buy more at $1,680, and if it falls more, keep on averaging down. What's the logic? You are watching right now the LAST bargain basement gold decline, in the midst of an unfolding world wide financial & monetary crisis. Nothing is being done to ward off that crisis, the debt cannot be paid but the banks own the governments so governments keep bailing them out, & at last it will all blow up, taking all the world's phony fiat currencies with it. Only thing left standing will be gold, silver, & productive assets. You are watching an epochal watershed, so don't sit there on your hands & end up having to tell your grandchildren, "You know, I could have bought gold back when it was $1,720, but I was too timid & trusted the dollar too much." NOTE HERE FOR SWAPPERS: If you swapped silver for gold in the spring at any ratio of 42 or lower, you can gain almost 30% in silver ounces by swapping back into gold now with the ratio above 54.5. This does not apply to swappers waiting for a 57.5:1 ratio -- those may abide patiently still. Silver lost 232.1c or 6.9% to close at 3149.3c. Real killer came for silver when it fell below 3350c. slipped & slid from there to 3250c, then dead at noon dove for the bottom, hitting 3088c. Thereafter it bobbed up, driven by short covering no doubt. Tis now trading at 3167c, & respectable crowds of buyers came in, driving up the premium on US 90% some. Future for silver is not even as clear as that for gold, because she is so much more volatile than gold. This much is clear. Silver broke down thru its uptrend line, and fell roughly from 3400 to 3100c. 3200c is smashed, so 3000c is the next support. Sure, it's possible silver could trade back to 2000c, but I don't think it will. 2800c maybe, even 2600c, but I can't see it lower. As with gold, we have been waiting for this last "wash out the last of the weak hands" drop so if you don't take advantage of it, it's your fault. Yep, I know the smarmy saying about not trying to catch a falling knife, but these silver plunges take place so fast, and rebound so quickly, that knife commenbt awes me not. If you had bought silver on the last such plunge, at 2615c, you'd be sitting on nice gains today. Yes, silver will probably drop farther, but there's another saying that applies here: you snooze, you lose. You delay, it gets away. NOW HEAR THIS: you are watching a normal & usual correction in an ongoing gold and silver bull market. This bull has years yet to run, & from here we are not looking for a double, but a quadruple or better. On 17 November 1922 all the voters in Siberia voted for union with the USSR -- both of 'em. On 17 November 1734 John Peter Zenger, New York printer, was arrested for libelling the governor. His trial became the foundation stone of freedom of the press, and jury nullification, when a jury acquitted him of all charges. Think about that next time you try to dodge jury duty. On 17 November 1558 Elizabeth I ascended the English throne when her sister, Queen Mary, died. Ironically, it was 24 years to the day from the day parliament had made her father Henry VII supreme head of the English Church.
Argentum et aurum comparanda sunt —
Silver and gold must be bought.
— Franklin Sanders, The Moneychanger
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