Yesterday I left out the detail that China, too, climbed aboard the Great Ship Inflation by lowering bank reserve requirements. All & sundry, East & West, still believe a lie & strong delusion, namely, that printing money will somehow fix the problem that printing money caused. And for you titillation, amusement, & satisfying vindication of the truth, I offer the following figures on PREVIOUS Federal Reserve swap initiatives, such as the one they announced yesterday to bail out Europe. I have given below the date of the initiative, the Dow on that date, the number of days later the next Dow reading was taken, & the LOSS by that date. Forget not, neither overlook ye, that in every single case the Dow INITIALLY rose strongly, then shortly began falling again. Wow, it's almost as if the stupid swap initiative actually DROVE STOCKS DOWN. 12 Dec 2007, Dow 13,473, 41 days later down 11%. 18 Sept 2008, Dow 10,605, 22 days later down 20% 13 Oct 2008, Dow 9,387, 14 days later down 13%, and, learning nothing from experience, in two weeks the Fed tried it again, as follows: 27 Oct 2008, Dow 8,175, 24 days later down 8%. Them's the numbers, folks, & I hope y'all get the message: the Fed is NOT coming to save you, & all their fancy moves are just so much feckless shuffling on their way over the cliff. But watch out as the mad-man goes screaming over the brink: he is grabbing everyone to drag them over with him. Miss not this point: by yesterday's action the Federal Reserve made itself Lender of Last Resort to Europe and the world. SOMEbody called the Germans' hand & told Ben the Bernancubus to print a-pace. In a paroxysm of Double-Speak, Dallas Federal Reserve President Richard Fisher said, "We are not bailing out . . . Europe. We are trying to meet a shortage of dollars." Right, right, and "the check is in the mail," too, etc., and all those other mighty uncandid & disingenuous protests to the contrary. They did what they did, & the thing speaks for itself. Don't try to play Adam on us and re-name the giraffe a hippopotamus. It's a giraffe -- see the 12 foot neck? All right, enough of this fun! Point for y'all to take home is NOBODY IS GOING TO SAVE YOU. Every government in the world & every central bank is working together & employing the same failed & unworkable strategy: print more money. 'Twill not work. Has reached the limits of its historical epoch. 'Tis dead as a dodo, but if you act not to protect yourself, 'twill suck you down the drain with it. Only three ways to protect yourself: silver, gold, & productive assets: farms, businesses, all enterprises that produce an ongoing & recession-proof stream of income. Or you can sit there waiting for the Fed's cavalry to come save you, until you turn green with slime. After yesterday's binge, stocks took a day off to rest. Dow dropped 25.65 (0.21%) to 12,020.03. S&P 500 dropped 2.37 (0.19%) to 1,244.59. I'll be interested to see how low the Fed's swap initiative drives the stock market this time around. The US Dollar index lost only 7.5 basis points today (0.1%), indicating that somewhat less than 100% of the world believes the swap initiative will in fact cut any knots. Dollar has re-established support at 78 - 78.10, so as long as it holds on there a rally may remain in its future. Considering how well these Fed magic tricks usually work, that rally is most likely. Like a drunk who TRIES to rally and stand up off the bar floor, the Euro tried yesterday, but didn't do much more than lift up on an elbow. Today at 1.3469, up 0.21%, still way below the 20 day & 50 day moving averages. Could rally to 1.3800, provided its gets a spinal column transplant. Yen also jumped yesterday, but was docile, calm, and beaten back 0.19% today to 128.68c/Y100 (Y77.71=$1). Momentum is down. This present silver & gold market is turning into a big mistake for me. Once again I have been taught to forget the short term, forget reaching for lower prices, and keep my eyes on the long term and the ground reasons we are buying this stuff. Today's $10.20 loss in gold (0.6%) to $1,735.30 at Comex close saith little. The genuinely critical level is $1,720 - $1,725, & with a low at $1,733.66 gold came nowhere near that. It did, however, beat twice on the door of $1,750 with a high of $1,753.94. Once it breaks thru $1,750 -- assuming it falleth not below $1,725 -- gold will quickly jump higher, first to $1,775 then to the Big Test at $1,800. Looking at the longer term chart, gold has outlined a RISING trading channel, with a series of higher lows and higher highs. Yesterday it slammed slap against an internal trend line in that uptrend channel. Should it cross that line at $1,750, then it faces lateral resistance at $1,775 & $1,800, BUT THE CHANNEL'S UPPER BOUNDARY LIES AT $1,875 TODAY. Down below the channe3l boundary lies at $1,680. We have come to the point where waiting for lower prices makes less and less sense. A close above $1775-$1,800 will rob that strategy of all sense. Silver looks different. She has traded out into a great even-sided triangle, way out into the nose, and yesterday hit the upper boundary (the descending line). Today she backed off in a predictable little reaction after a long one-day rise. Silver dropped 3.6c to 3269.5c, but the high was 3340c, low only 3245c. Silver always forces us to bite our nails, that's her way. On the five day chart she has established support at 3250c, but the issue will be settled at 3400c. If silver fails there, then it will fall back. If it passes that barrier, then 3800c marks the channel top, 3683c the 200 dma. Right now silver is struggling to pierce its 300 day moving average. It will be a very good sign if she accomplishes that tomorrow. On 1 December 1969 the US held its first draft lottery since World War II. I had already been in the army about two months, in basic training, and if my number drawn had been 360 instead of 5, I believe I would have made myself a target on the rifle range. On 1 December 1934 Sergei Kirov, Stalin's political rival, was assassinated in Leningrad. That began Stalin's purge in which he eliminated his opponents in the Party, the government, the armed forces, academia, and the rest of Russia. He even established a gigantic prison camp system, the Gulag Archipelago, to torture, starve, and work them to death more efficiently. He is supposed to have said, Death solves all problems -- no man, no problem." In the Ukraine alone Stalin engineered the deaths of at least seven million, but when the bodies pile up that high, who can count? One estimate says Stalin, our noble ally in World War II, killed 23 million from 1932-39 while Hitler, who wouldn't have made much of an ally, either, killed only 12 million. Remember this is the same Stalin that many US reports went to visit, and came home singing the praises of. Sort of leaves you wondering how much you can trust their judgement, don't it? Anyway, Stalin produced in great quantities the one thing 20th century governments have been very efficient in producing: death and destruction. Kings & tsars were worse than this? My wife is taking me up to Nashville tonight to hear Gillian Welch. If I'm REALLY good she'll take me to the Krystal and buy me some fries.
Argentum et aurum comparanda sunt —
Silver and gold must be bought.
— Franklin Sanders, The Moneychanger
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