Just as people used to ask me in the years running up to the real estate peak in 2006, "Do you really mean that I should sell my house?" so today they ask me, "Do you REALLY mean that I should cash in my IRA?" Answer in both cases is, "Yes. Yes." My fear is that if you don't, the federal government will one day decree that your IRA can only invest in US government bonds. Where will you be then? Anyway, one owneth not what one controlleth not, and thou controllest not thine IRA, the government doth. If that's not true, then why do you have to pay a penalty and tax to take possession of it? In my little natural born fool's mind, anything I don't control doesn't really belong to me yet. Quaint, I know, but realistic. Hidebound Tennessee. For all the hu-hu yesterday about the Great Fix in Europe, the euro did well to keep its lips above water today. Ended at 1.3409, up a bit, 0.7% -- enough to see, I reckon, if you have a microscope handy. Yen rose also to 128.73c per Y100 (Y77.68/$1). US DOLLAR INDEX stubbornly refuses to to bow to Euro-exuberance by sinking below 78.50. Today trading at 78.619, up 4.9 basis points, a tiny 0.06%. Since Friday the trend has been up, with higher lows and higher highs. Must-hold line is the uptrend line at 78.45. Long as the scrofulous dollar holds that line, it points up. Dow Jones Industrial Average today rose an uncertain 52.3 points (0.43%) to 12,150.13. S&P500 rose 1.39 (0.11%, even more uncertain), to 1,258.47. Okay, ask me why I think 12,200 puts the cap on any stock market rally? Glad you asked! Because going back to November 2010 you can draw a line from the 11/10 top across the bottoms in 2011 & you will see a massive, undeniable head and shoulders top. That H&S is confirmed by a gigantical drop in August once it closed through the neckline, from 11,900 to 10,604. All the moiling since then has done no more than take the Dow back up to that neckline for a Final Kiss Good- Bye before it falls to perdition. O, the weeping & wailing & woe! It draws ever nearer. I have to sort of break the rules today for gold. I say "sort of" because nowadays the gold market runs 24 hours, so closes aren't quite as dispositive as once they were. Here's what I mean: Yesterday gold closed at $1,730.70 on Comex, and today at $1,727.90, ostensibly "down" $2.80. But when you looked at what happened in the market AFTER Comex closed, instead of merely posting two down days, gold actually traced out something like a key reversal to the upside. Here's where I'm stretching the rules. A key reversal occurs when a market trades into new low territory, then closes higher at day's end. Second half confirms when it closes HIGHER the next day. Yesterday after Comex closed the Globex market traded down to $1,717. Then overnight gold kept on dropping, and posted a low at $1,702.47 (neatly defending, by the way, the $1,700/$1,705 support). That low came while New York was open, about 10:00, and the rest of the day gold climbed like a Sherpa. By my math, $1,727.90 is higher than $1,702.47, and after gold had come under that attack, & been driven down so far, to come back nearly to unchanged -- viewing the whole 24 hours together -- looks like a market turning up. It also left behind an upside-down head-and- shoulders-ey chart, with a $1,720 neckline. Gold stopped today at $1,730 -- actually, is trading a bit above that now at $1,730.45. Tomorrow gold must not trade below $1,725 & must climb & close above $1,730 or 'twill explode my rule-stretching theory. Add to my upside suspicions silver's behavior today. It rose 36.6c to close Comex at 3267.2c. Mmmm -- silver rose 1.1% while gold dropped minutely. I have to call that a BULLISH divergence. Silver's chart last two days looks like a reversal, too, provided tomorrow it clears 3300c, or at worst doesn't close below 3250c. For the nonce & until gainsaid, I interpret the last few days' moves in silver & gold to be "reactions back to support", that support being the rising boundary of an even-sided triangle. Closes below those lows mentioned above would cancel that interpretation. Be advised that coming shortly is some break out of those even-sided triangles, up or down. For now, though, these prices near the trendlines offer good places to buy. Should they drop more, I will buy more. On 6 December 1885 President Jefferson Davis died in New Orleans. Born just across the Tennessee line in Kentucky in 1808, he graduated from West Point in 1828, & later fought in the Black Hawk War (1832). There he served under Col. Zachary Taylor (later US president) and married his daughter, Sarah Knox Taylor. Married in 1835, bride & groom both contracted malaria, and Sarah died three months after they were wed. After 8 years as a recluse, Davis was elected to the US House in 1845, shortly after marrying Varina Howell. He resigned from the house in 1846 to lead a volunteer regiment in the Mexican- American War. Because of his heroic war service, the Mississippi governor appointed him US Senator for an unexpired term. In the senate he chaired the Committee on Military Affairs, and in 1853 President Pierce made him Secretary of War. Ironically, he updated the very US Army which would later face the Confederacy with the latest technology. Not a secessionist himself, he left the Senate when Mississippi seceded, and was elected president of the new Confederacy in February, 1861. Critics abound who in hindsight can show what terrible mistakes Davis made. R. E. Lee didn't think so, and it is doubtful that anyone could have done a better job leading the South. At the War's end Davis was captured near Washington, Georgia. When he was transferred to a military transport at the coast, the little black boy, Jim Limber, whom his wife had rescued from a beating on Richmond's streets and whom the Davises had adopted, was torn from Mrs. Davis' arms and never seen again. Jefferson Davis was imprisoned for two years under monstrously cruel conditions at Fortress Monroe. Pope Pius IX sent him a crown of thorns. The whole time he was threatened with prosecution for his part in the war, but eventually the US government realized they could never get away with a trial because secession was not illegal. He was released on a $100,000 bond, posted by in part by prominent Northerners such as Horace Greeley, Cornelius Vanderbilt, & Gerrit Smith. No point in my praising Jefferson Davis' astonishing nobility, courage, & purity of heart. Y'all will say I am biased. However if you want to learn for yourself what Davis was like, read Mrs. Felicity Allen's Jefferson Davis, Unconquered Heart. She spent 20 years researching & preparing her book, and it's the best Davis biography available.
Argentum et aurum comparanda sunt —
Silver and gold must be bought.
— Franklin Sanders, The Moneychanger
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