Another Euro-bobble, as the eurocrats failed again to enact any substantial solution to their bank solvency crisis. They are, however, tightening the power stranglehold on member countries & centralizing power like a drunk ordering highballs at a free bar. The outcome was a spectacular dollar rally. US dollar burst through 79 and is now trading at 79.58, up 1.22% or 94.8 basis points. The dollar's opposite numbers, of course, tumbled. Euro gapped down and fell to the October low (131.64). Ended at 1.3182. If the euro cannot check its fall here, it will tumble to 1.2500 to 1.2000. Yen fared somewhat better, but also gapped down. Remains in the 4-1/2 month range. Closed 128.33c/Y100 (Y77.92/$1), down 0.4%. Euro's greatest enemy now is gravity. Back away from the US dollar chart & look. It has now nearly reached the 79.84 early October high, & the 79.70 November high. This makes the dollar's THIRD time to knock at that 79.80 door, so the outcome won't be indifferent. Either it will slice through that 79.80 resistance like the Golden Horde of Mongols slicing through Eurasia, or it will fail & fall like your reading glasses out of your shirt pocket when you leaned over the rail to look down off the Empire State Building. I'm laying my bet on the dollar rising, because the Eurocrats' stubborn clinging to their unblemished fecklessness may be, at last, spooking the market into a REAL panic, just like 2008. When that happens, everybody will drop everything & run to the dollar for salvation. Boy. Will they ever get THAT wrong. I see reports that European commercial & central banks may be selling gold to raise dollars. May be, I have no way of checking that & they aren't about to tell me. But in a panic folks always rush into whatever the majority perceive as the safest instrument. Right now that's the dollar, so you have to expect silver & gold to suffer in a panicked dollar rally. Could be worse -- they could be stocks. Stocks have rolled over on their belly again, and are about to roll off the wall. Dow today barely held on at 12,000, closing down 1.34% (162.87) at 12,021.39. S&P500 lost 1.64% (18.72) to 1,236.47. Here's a guess. The Dow's decline began off the May top, fell to 11,950, rallied back to 12,700, then fell to 10,400 in October. That last was the big tough leg (so far), and all the drama since October has been nothing more than a correction of that fall. Correction ended at 12,200, where it failed. Now stocks have in front of them a "journey", as the pompous like to intone. Their journey will carry them below that October low at 10,400, & on down into the bowels of the earth. How could any enterprise prosper in the government-caused regulatory & financial anarchy that terrorizes markets today? That brings us to silver & gold, whose plugs were yanked today. Gold fell $48.60 (2.8%) to 1,664.20 on Comex. Silver fell 3.8% (123.8c) to 3093.5c. I'm not trying to cover myself, but remember I did warn y'all that metals could break up OR down out of their even-sided chart formations. Down it was. Gold dropped clean thru its milestone 150 day moving average (now $1,664) when it struck bottom at $1,657.32. Here's a catchy footnote: during the life of this bull market, you could hardly have gone wrong, even for a short time, blindly buying gold at its 150 DMA. Only on one occasion -- 2008 -- did it stay below the 150 DMA for enough time to scare you, and even then it came back. What about other destinations? The 200 DMA stands at $1,613, and the last low at $1,535. Everyone who called today asked, "Will it drop farther?" Might as well flip a coin as ask me. That 150 DMA is a place I like to buy gold. I will buy more at the 200 DMA, and I will be looking around to sell grandchildren if it reaches $1,535. Silver broke 3150c support & fell all the way to 3086c, a leetle higher than the November low (3069c). I like to look at the worst possible outcome whenever the roof appears to be caving in. If silver fell the height of the even-sided triangle that it has sketched out, it would fall to about 1750c. Not impossible, but not likely. That flash low at 2615c in late September offers another target, as does 2000c below that. Before y'all start looking for a rope to lynch me with, let me remind y'all that silver is VOLATILE, way more volatile than gold. Always is, & the scary side of that appears when silver corrects. The side you like, the outperform-gold-four-to-one side, comes when silver rallies. You don't get one without the other. Silver & gold have just fallen out of even sided triangle formations. I would buy gold because it's at the 150 DMA, as I mentioned above. Silver, on the other hand, has fallen below its 300 day moving average. In this bull market, if you had done nothing brighter than merely buying silver whenever it sank below its 300 DMA, you would now be sitting on a pile of cheap silver. Only in 2008 did silver stay below its 300 DMA for long, and then only for about 8 months. Yes, most everybody who now owns silver or gold is puking in his wastebasket today, with visions of having to buy a hurdy-gurdy & monkey to make a living, but wait. Exactly when they are all sticking their heads in the wastebasket is the time we want to be buying. Or do y'all think that over the weekend Ben the Bernancubus and all the other central bank heads suddenly got religion & decided they weren't going to gut the public anymore? They are caught in their own trap. Either they inflate, or they die. Y'all know as well as I do which they'll keep on choosing. Y'all will find this hard to believe coming from a Tennessean, but 3 years ago my son & I went to New Hampshire, shopping for a Scotch Highland bull. We found Bill & Kathy Baker, who for over 30 years had been line breeding & ruthlessly culling for perfect animals. When I saw their cattle, they literally took my breath away. More than that, down the road Kathy has a shop where she makes wreaths. No, no, not those cheesy plastic things, but REAL wreaths out of dried flowers or fresh balsam. Everything they use is locally grown or gathered, they never use any additives or chemicals, and Kathy and her crew make the most exquisite Christmas wreaths you have ever seen, and ship them all over the US. They are all made to order. I think Kathy sells out every year, but she probably still has time to make a few more wreaths. You'll find them at www.cubemtn.com. On 12 December 1946 a United Nations committee voted to accept a six-bloc tract in Manhattan to be the site of UN headquarters. The land was a gift from John D Rockefeller, Jr. That was sure-enough disinterested and public spirited, wasn't it? On 12 December 1862 came the Battle of Fredericksburg, Virginia where Union General Ambrose Burnside smashed regiment after regiment against entrenched Confederates behind stone walls atop Marye's heights. Burnside took 12,653 casualties to Lee's 5,377, and shortly had to look for a new job. The battle lasted from 11 December to 15 December, and was probably the most lopsided engagement of the war. The battle was a tragic monument to what one dedicated man can do with stupidity AND professional military training.
Argentum et aurum comparanda sunt —
Silver and gold must be bought.
— Franklin Sanders, The Moneychanger
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