World is full of folks who like to kick a feller when he's down, & mercy, they're a-piling on gold & silver. Somebody sent me a quotation from the Great Dennis Gartman (at least, I'm sure he thinks he's great) about how the bull market in gold was over. Even had 20 year charts to prove it. Ahh, think again. 20 year chart is useless here because it takes in the last half to the last gold bear market and the last half of the stock bull market. In other words, as cycles go it starts at the bottom of a sine wave & runs half way through, instead of showing from bottom to bottom or top to top, a complete cycle. Gartman & the article quoting him made much of gold's gains against the dollar & stocks, as if that "proved" gold's bull market has ended. Sigh -- yes, stocks have lost 80% against gold, but they will lose another 80% before this ends. Right now about 7.5 oz of gold buys the Dow, down from 44.5 oz at the cycle top in August 1999. But returning to a whole cycle that topped in 1980, we find that the Dow bottomed at one (1) oz) of gold in 1980, 2 oz in 1934, & 1 oz in 1996. Besides, none of the psychological indicators of a bull market top have appeared, like Gartman & every other guru touting that a "new era" has been reached where gold will remain at permanent high prices. Have y'all seen that in the headlines yet? I haven't. Anyhow, fact is that while gold & silver are making a big correction, after huge rises that went before (2008 - 2011, $705 - $1,927 & 880c to 4850c), their bull market has not yet ended. Neither in price (now 7.6x vs. 1980's 24x for gold and now 12x vs. 38-2/3x for silver) nor in time (only 10 years so far, vs. 15 - 20 years) have silver & gold fulfilled their bull market promise. Nor have the causes driving gold and silver up changed, unless central banks have announced "No more inflation" and governments have sworn off deficit spending. I haven't heard that yet. But what do I know? I'm nothing more than a natural born fool from Tennessee, not one of them smarty writers from New York. Them fellows know everything, like John Corzine & Bernie Madoff. Stocks dropped 131.46 points (1.10%) for a Dow close at 11,823.48. Once they broke that 11,950 support, only air loomed beneath. S&P 500 dropped 1.13% (13.91 points) to 1,211.82. Next stop is 11,600, etc., downward. Yesterday the Dow cut thru its 200 day moving average (11,942), today it touched its 50 DMA (11,774.54). Momentum clearly points in gravity's direction. US DOLLAR INDEX rose again today, fueled by deflation fears & "the-world-&-the- euro-are-flying-apart" fears, up 28.2 basis points to 0.36%. This little rise alone accounteth not for the huge drops in stocks & metals, but it doth confirm yesterday's upside breakout. Y'all better get used to a rising dollar, cause it's gonna stretch its legs to 81.50, maybe 83.50, maybe even 88.70. Have I kept this, my expectation, a secret? Have I hidden this from y'all, when all them New York fellers were telling y'all the dollar was going to drop? I don't remember. Y'all forget about the Euro. Broke 1.3200 support yesterday, and 1.3000 today. Closed down 0.38% to 1.2986. Will drop further & further. Look for 1.2000. Japanese yen dropped 0.05% today to 128.18c/Y100 (Y78.02/$). Trading at the bottom of its 5 month range, but stubbornly clinging. Today was not a banner day for silver & gold. Gold lost a massive 4.6%, $75.60, to close Comex at $1,584.30. Silver lost 7.4%, 231.4c, & shuttered Comex at 2888.1c. End of the world? Well, some folks think so, but I've been living on the edge of a volcano for years, & I'm not ready to refugee yet. If silver does not hold around 2900c, then there's very little to catch it between here & lateral support at 2615c, just a little bottom at 2843c. More likely is a drop to 2615c, quickly, or a grinding attrition down to 2000c or even 1715c. Making some assumptions about silver's behavior from end-September thru last Monday gives me a silver target of 2700c -- if height of formation equals depth of drop. Where silver will stop I don't know, but I've been whipped like this enough times in the past to know that exactly now, when the screaming enemy is pouring over the parapets & you are running out of ammo is the time you have to get plumb junk-yard dog mean, and make up your mind that you are not going to whine and lose your head. I lived through 2008, when silver dropped from 2067c to 880c, losing more than 100% of the preceding gain, and I saw it come back to 4850c. THE COMEBACK WILL COME BACK AGAIN. It may delay, but watch for it. It will surely come. Gold took a bad beating with a big stick today. High came at $1,641.25, but once it crossed below $1,620, bottom fell out, all the way to $1,558.35. We are getting near my most likely target, $1,535. I will surely close my eyes, bite my lip, and buy there. The sort of heads-and-shoulders-y formation on gold's chart from end-September to early December -- if that's what it is -- gives a target of $1,546. Everything I've said tonight aims to calm y'all down and fix your eyes on what is really important, the LONG TERM. I know the internet & the media & all the wise & big-shots in the world want to distract you with the last 2 hours and the next 24, but history doesn't rise and set on one day. Gold & silver remain in a bull market. Count on that. MILESTONES OF AMERICAN CULTURE: On 14 December 1968 Marvin Gaye's "I Heard It Through The Grapevine" with its unfathomably complex lyrics and intricate harmonization hit the top of the charts, and stayed there through January 1969. Somebody ought to erect a monument. On 14 December 1819 Alabama joined the American union. Her motto says, "Audemus jura nostra defendere" -- We dare defend our rights. Wish they could get the rest of America to adopt that motto, instead of its current one, "Faciemus quidquid tu mandes" -- We'll do whatever you say. On 14 December 1782 the British evacuated Charleston, South Carolina. The Revolution was over at last. Freedom was won, for a little while.
Argentum et aurum comparanda sunt —
Silver and gold must be bought.
— Franklin Sanders, The Moneychanger
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